We expect GDP growth of 6.5% for 2021
The central bank is more cautious on the inflation outlook.
Given the higher-than-expected carryover, there are upside risks to our GDP growth forecast of 6.0% for 2021.
Swifter recovery means current stimulus levels no longer necessary.
Una recuperación más rápida significa que los niveles de estímulo actuales ya no serían necessários.
Large annual growth in April reflects a favorable base effect.
Some trade deficit narrowing is likely ahead as the effect of protest action and mobility restrictions transitorily weaken import dynamism.
We revised our trade surplus projection to USD 14 billion for 2021, down from our earlier estimate of USD 17.0 billion.
We lowered our forecast for the current account surplus to 1.5% of GDP in 2021 (from 2.0% of GDP)
We estimate that the twelve-month primary deficit fell to 3.4% of GDP, from 6.5% in December 2020.
The reopening of the economy supported the recovery of internal demand
The pandemic continues to delay fiscal consolidation in the short-term
Containment of the outbreak is key for the recovery
Manteniendo el grado de inversión
Maintaining the investment grade
We forecast 47% inflation for this year, with risks tilted to the upside
El freno de la pandemia es clave para la recuperación
Protest action will contain activity dynamics in May
A downgrade by Fitch in the coming weeks (also to below investment grade) is possible
Our baseline scenario assumes an agreement with the IMF after the mid-term elections, adjusting macro policies somewhat.
Industrial production was supported by a favorable base effect on an annual basis
La tasa de política se mantendría expansiva en el horizonte de dos años para consolidar la recuperación.
The policy rate would remain expansionary over the two-year horizon to consolidate the recovery
Upside pressure to inflation came mainly from other services and non-core food prices
Risks are in favor of several rate hikes before the close of the year
Riesgos a favor de varias alzas de tasas antes de fin de año
The consumption-led economic recovery will likely lead to yearend inflation above the 3% target
Hacia adelante, la recuperación de la demanda interna, impulsada por el aumento de las medidas de apoyo, resultaría en una reducción del superávit comercial
Core inflationary pressures are normalizing more slowly amid a gradual labor market recovery
Internal demand was supported by the easing of social distancing measures
Going forward, the domestic demand recovery, boosted by increased support measures, will see a further trade surplus narrowing
Upward revisions in inflation projections increases the odds of Banxico hiking rates
A rising CAD increases odds of an earlier start to the rate hike cycle
Higher food and energy commodity prices exerted upward pressure to inflation
A mild sequential drop shows the economy has adapted to operating under restricted conditions
Una menor caída secuencial muestra que la economía se ha adaptado para operar en condiciones restringidas.
The June IPoM would signal rate hikes are coming this year.
Esperamos que el Imacec de abril aumente un 11% interanual
Con las restricciones de movilidad vigentes en mayo, el ritmo de la recuperación del mercado laboral sería lento hacia adelante
We expect the April Imacec to increase 11% YoY.
With mobility restrictions still in place during May, the pace of the labor market recovery ahead is set to be slow.
El IPoM de junio indicaría que habría alzas de tasa este año.
Most Board members considered the balance of risk for inflation bias to the upside
Services and construction sectors supported the recovery in the quarter
There was a deterioration in the trade balance in 1Q21 due to supply shocks
Vehicle exports recovered in April after the sector was affected by supply shocks in 1Q21
The reopening of the economy is exerting upside pressure in core services inflation.
Some tightening of social distancing measures affected activity at the margin in 1Q21
Retail sales are now above pre-pandemic levels
We expect the contraction of the fiscal deficit to slow down ahead due to tougher mobility restrictions.
We expect a sequential decline in 2Q21 due to the effect of the drought on agricultural output and a new round of mobility restrictions
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Mayores utilidades de la IED, un mayor déficit de servicios y un superávit comercial moderado apoyaron el retorno a un déficit
Los riesgos se inclinan al alza, pero mayor incertidumbre política y su impacto en la confianza y la inversión nos llevan a mantener nuestro crecimiento.
Recovering FDI profits, a larger service deficit, and milder trade surplus supported the return to a deficit.
While risks tilt to the upside, higher political uncertainty and its potential impact on confidence and investment, keep us from changing our growth forecast.
On an annual basis, the monthly GDP in March was boosted by a favorable base effect
Dynamic imports are offsetting export gains amid a low base of comparison
The implied statistical carry over exceeds our current 5.0% for 2021.
Core inflation was higher than the headline reading.
La TPM finalizaría 2021 en 0,75%, pero la probabilidad de que el BCCh la suba aún más ha aumentado
We see the policy rate ending 2021 at 0.75%, but the odds that the central bank hikes by more are increasing.
The Board now sees the balance of risk for inflation tilted to the upside
The data points at a 6.2% YoY growth for the coincident activity indicator ISE (to be released tomorrow)
Negative supply shocks in manufacturing output seem to have faded away in March
Pronosticamos un crecimiento del PIB del 3,5% este año, pero la pandemia sigue siendo el principal riesgo para nuestra proyección
We revised our forecast for the nominal fiscal deficit up to 5.0% of GDP, from 4.0% in our previous scenario.
We forecast 3.5% GDP growth this year, but the pandemic is still the main risk to our projection
Internal demand indicators remain below pre-pandemic levels
Revisamos nuestra previsión para el déficit fiscal nominal hasta el 5,0% del PIB, desde el 4,0% de nuestro escenario anterior.
Transitory factors (pension payouts, global oil prices) would lead to an inflation acceleration in the short-term.
Altos precios del cobre contendrían el déficit en cuenta corriente de este año
High copper prices would contain the current account deficit this yea
Factores transitorios (pago del 10% de los fondos previsionales, precios del petróleo) conducirían a una aceleración de la inflación en el corto plazo
Inflation was slightly above market expectations.
Fragmented Congress likely to make governability a challenge
COP dynamics and disruptions to food supply are upside risks
Tax reform dilution prevents significant fiscal consolidation and credit rating downgrades become more likely
Difficulties in advancing with fiscal consolidation
The microeconomic policy direction continues to generate uncertainty.
The central bank noted that fiscal consolidation is key to maintain risk premia under control and guarantee capital inflows.
Annual growth was pulled up by commerce and services amid a low base of comparison
Comercio y servicios impulsaron el crecimiento anual en medio de una base de comparación baja.
The low base of comparison would lead the monthly GDP index (IMACEC) to increase 5% YoY.
Relajamiento de restricciones de movilidad a fines de abril favorecerían la recuperación del mercado laboral a partir de mayo.
Despite a bullish activity outlook, appeal for further easing is waning.
With the loosening of mobility restrictions by the end of April, the labor market recovery would likely gather speed from May onwards
Supply disruptions in the manufacturing sector affected 1Q21 GDP
Una baja base de comparación llevaría al Imacec de marzo a crecer 5% interanual.
Mobility restrictions in April and likely May would slow the labor market recovery ahead
Public debt decreased amid a higher GDP base
Manufacturing exports recovered, while non-oil imports posted a solid growth.
Services sector deteriorated despite the easing of social distancing measures from the second half of February
The easing of social distancing measures supported the expansion of retail sales
Annual inflation reflects an unfavorable base effect due to lower gasoline prices a year ago
Robust export growth in 1Q21 was due to higher commodity prices.
Looking ahead, we expect a sequential rebound of activity in March
The central bank remained the main source of financing for the Treasury.
Recovering domestic demand is restraining the pace of the trade correction
Negotiations with Congress are likely to yield a watered-down version of the bill.
The cost of signaling rate hikes only in 2022 is low given adverse short-term dynamics.
El costo de señalizar aumentos de la TPM solo en 2022 es bajo dada la dinámica adversa a corto plazo.
The anti-inflationary toolkit is reduced to tighter controls, with an eye on the October legislative election.
We expect the Colombian economy to bounce back with growth of 5.0% this year, after shrinking 6.8% in 2020
The monthly GDP was less affected than expected by the retightening of social distancing measures.
We have adjusted our GDP forecast for this year down to 3.5%, from 4% previously.
La vacunación avanza, aunque los casos marcan picos
Ajustamos a la baja nuestra proyección de crecimiento para este año a 3,5% desde 4% anteriormente.
Vaccination is progressing, although cases are peaking.
Macroeconomic policies will likely lead to increased distortions
A global supply disruption of semiconductors and temporary gas shortages affected manufacturing output
Polls suggest six candidates could slip through in the first two places and then participate in the second round
A structural tax reform is a key prerequisite to maintain investment grade rating
Core annual inflation also accelerated.
The majority of Board members considered this is not the end of the easing cycle
Inflationary pressures remain contained amid significant slack in the economy
Las presiones inflacionarias permanecen contenidas dadas las holguras de capacidad en la economía
El entorno global favorable sería parcialmente compensado con la mejora de la demanda interna y mayores precios del petróleo
The benign external environment would be partially countered by improving domestic demand and higher oil prices
Still, internal demand indicators remain below pre-outbreak levels
Limited inflationary pressures will favor maintaining a significant monetary stimulus in place
Strong fundamentals support growth of 6.5% this year.
Fundamentos robustos consolidarían un crecimiento de 6,5% este año.
Las ganancias secuenciales están en línea con un escenario de recuperación gradual
Sequential gains remain in line with a gradual recovery scenario
Ahora esperamos que el ciclo de alzas comience en el 4T21
Improved economic outlook and higher oil prices support fiscal accounts but weak oil production is still a risk
A transitory deterioration of labor market indicators is expected in March amid renewed quarantine measures.
En marzo habría un deterioro transitorio del mercado laboral en medio de nuevas cuarentenas.
We now expect the tightening cycle to begin in 4Q21.
The reintroduction of mobility restriction in March would likely result in another transitory loosening of the labor market.
El Banco Central está aplacando las expectativas del mercado de alzas de la TPM a fines de este año.
We forecast GDP growth of 6.0% for 2021, largely driven by a high statistical carryover (5.0%).
The central bank is downplaying market expectations of rate hikes later this year.
We expect higher commodity prices and import controls to boost the trade surplus this year
Our baseline scenario considers stable rates at 1.75% for this year, but risks lean to an earlier lift-off
We expect the trade surplus to narrow slightly in 2021 relative to 2020
Odds of further easing are low.
Manufacturing output and services sector are a temporary drag to activity
The retightening of social distancing measures affected retail sales
Energy prices exerted upward pressure.
We forecast GDP growth of 6.0% for 2021.
Tax collection increased in real terms in the quarter ended in February, led by higher export taxes
External demand is the main driver of the recovery
Un tipo de cambio flexible, la caída de la demanda interna y términos de intercambio favorables llevaron a un superávit del 1,4% del PIB en 2020.
Drivers for growth are positive, but new lockdowns and the fading effect from pension withdrawals will be short-term drags ahead.
El impulso del crecimiento es positivo, pero nuevas cuarentenas y la disipación del efecto del retiro previsional incidirán a la baja en el corto plazo.
With restrictions lifted and business sentiment improving, imports are expected to resume their recovery path
A flexible exchange rate, the domestic demand slump, and favorable terms of trade led to a 1.4% of GDP surplus in 2020.
Vemos riesgos a la baja a nuestra proyección de crecimiento del PIB de 3% para este año
La campaña de vacunación masiva no comenzó llevando a un aumento del descontento social.
We see downside risks to our 3% GDP growth forecast.
With most restrictions lifted in February, the activity hiccup is expected to be transitory
Downside risks to our 4% GDP growth projection
Worldwide temporary shortage of semiconductors is likely affecting manufacturing output
The agreement with the IMF looks increasingly distant
Fiscal consolidation is the key macro risk to monitor in the near term
More populist measures emerged from Congress as general elections near
Core inflation stood practically unchanged.
With the economic recovery advancing, to be further aided by surging oil prices, additional rate cuts are unlikely
Inflationary pressures moderated and core inflation remains at historical lows.
Amplio superávit pese a que las importaciones cobraron impulso en el margen
The wide balance came despite imports gaining momentum at the margin.
Las presiones inflacionarias se moderaron y la inflación subyacente se mantiene en mínimos históricos
A negative base effect (Mexico’s black Friday) affected sequential private consumption.
The central bank also expects a better economic outlook for 2021 and 2022.
We see stability for the CAD at (a wide) 3.4% of GDP this year
A pesar de la contracción interanual, mejoras secuenciales persistentes son un buen augurio para las perspectivas de recuperación.
Inflation remains above the BCRP’s central target of 2%
A pesar de la contracción interanual, mejoras secuenciales persistentes son un buen augurio para las perspectivas de recuperación.
The economic reopening since January would bolster employment dynamics
U.S. economic strong recovery and a soft internal demand will support the trade surplus in 2021
El Imacec se habría contraído 2,0% interanual en enero
La reapertura económica desde enero impulsaría el dinamismo del empleo
A still fragile labor market was shaken by the new round of mobility restrictions.
IMACEC would contract 2% YoY in January.
External demand is benefiting the recovery
We forecast a trade surplus of USD 17 billion for 2021, up from USD 12.5 billion in 2020
Trade balance was supported by a strong recovery in external demand, poor internal demand and a weak currency
Tightening of external financial conditions likely to limit further easing
Annual core inflation remained persistent
We forecast GDP growth of 5.5% for 2021.
The deterioration reflects tighter social distancing measures and a negative base effect
We forecast a reduction in the primary fiscal deficit to 4.5% of GDP this year.
Final domestic demand was supported by easing of distancing measures and fiscal stimulus
For 2021, we estimate growth of 4% due to the normalization of activities.
We expect a weak labor market to reinforce disinflation this year.
The positive impact of monetary stimulus, the vaccination program, and higher oil prices would aid an activity bounce back this year
Ajustamos nuestra proyección de inflación a 7% para fin de 2020, desde 8% anteriormente.
Para 2021 estimamos un crecimiento de 4% debido a la normalización de actividades.
We expect a GDP contraction of 4.4% in 4Q20.
Warning sign for the government as it seeks to reduce inflation, with an eye on the legislative election.
Industrial production is closer to pre-pandemic levels driven by external demand
Elevated risks and changes at the board make the path for rates less certain.
We expect further easing over the next two meetings
With signs that the worst of the crisis has passed, more dedication towards the medium-term challenges would be required
The vaccination campaign started
The government will likely try to preserve the current precarious macro equilibrium.
Inflation was driven mainly by an increase in energy prices
La recuperación económica doméstica anticipada y el creciente déficit de ingresos serían contenidos por los altos precios del cobre este año