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See here the publications of Latam Economic Indicators and Scenario.
This report is released every evening and summarizes the main events that happened in LatAm during the day
Non-energy imports fall sequentially as economic outlook deteriorates
Tradable goods drive inflation, but pressure ease somewhat
This report is released every morning and summarizes the main events that happened in LatAm during the day
In July, Inflationary pressures at the margin have moderated somewhat
However, momentum is still positive
Rising inflation amid upbeat activity, justifying a contractionary monetary policy
Core inflation accelerated in the month
Non-mining activity is in a technical recession, albeit mild for now
The MoF reduced its 2022 GDP growth forecast to 2.4% (previously at 3.4%)
Tightening financial conditions and a weaker COP, add risks to a further improvement in the labor market ahead.
The pace of future monetary policy adjustments will be data-dependent.
The retail pull is gradually easing.
However, monthly GDP in May and implied in June was weak
Expected economic slowdown will impact employment dynamics as the year unfolds.
Elevated inflation expectations are reflecting greater inflationary persistence
In June energy imports increased sharply
Services sector was the main drag to activity in the month
We expect Banxico to hike its policy rate by 75-bps in August
We forecast a fiscal deficit of 3.3% of GDP for this year, above the IMF-agreed target of a deficit of 2.5% of GDP.
The real wage bill is supporting private consumption
We see downside risks to our trade surplus forecast of USD 11 billion for 22, despite a new round of tighter import controls
We continue to see downside risk to our GDP growth forecast of 2.5%, even with a favorable carryover of 3.9%
Solid domestic demand would keep the current account deficit wide
A tightening macro policy mix will likely dent activity dynamics ahead.
Non-natural resources sector is the main drag to activity
The total intervention program is estimated at USD 25 billion.
The recent tightening of import controls and the wider spread in the FX parallel market are likely to drive inflation up
Another 75bp hike to 9.75% with more to come, short-term inflationary pressures rise, amid already high peristence
Construction sector deteriorated while manufacturing output grew at a soft pace
Weaker CLP stands in the way of disinflation
A tight macro policy mix and high inflation should ease domestic demand ahead
Food prices was the main upward pressure to CPI
Most members seem aligned with at least another 75-bp rate hike
Private consumption momentum remains solid
Several risks exist that could lead to higher inflation and a slower convergence process
Tax reforms to raise revenue by 4.1% of GDP.
High commodity prices are still exerting upward pressure to CPI
Private sentiment continues to deteriorate
A larger adjustment now to prevent the need for a more aggressive reaction later
Employment in May returned to pre-pandemic levels
The retail pull is easing amid a lack of additional liquidity injections
Self-employment drives employment dynamics at the margin
In spite of the deficit, international reserves increased by USD 3.2 billion led by the IMF loan
The trade deficit was dragged by both the energy and non-energy balance
Chile’s MoF to resume dollar sales
Manufacturing and services sectors supported the monthly GDP
We continue to see downside risk to our GDP growth forecast of 2.5%, even with a favorable carryover of 3.9%.
We expect Banxico to keep the same rate hike pace at least in the next meeting
First regional GDP report show Metropolitan region leading growth in 1Q.
The Board hiked by the lowest proposed magnitude for the first time during this cycle.
Retail sales is supported by the real wage bill
We expect Banxico to hike its policy rate by 75-bps
The energy trade balance continued to deteriorate amid rising prices
The fiscal account performance has diverged from the fiscal consolidation agreed upon with the IMF few months ago.
Private consumption supported domestic demand
The incoming administration will need to negotiate with a divided and fragmented Congress
Higher terms of trade amid a gradual import moderation are supporting smaller trade deficits
We recently revised up our forecast for the 28-day Leliq rae to 55% for December.
Given rising inflation expectations and solid activity dynamics, the central bank is likely to accelerate the pace of hikes
Temporary effects seem to be behind the current fiscal performance
We recently revised our inflation forecast for 2022 up to 77%, from 70%.
Manufacturing output was the main driver of industrial production in the month
We expect Banxico to accelerate the rate hike pace (to 75-bp) in the June 23 meeting
The economy continues to decelerate, but part of the correction has been delayed
Inflation will likely peak close to 13% during 3Q22.
The communiqé suggests a terminal rate of at least 9.5% (through two 25-bp adjustments)
Surging lithium sales is acting as a buffer
Core inflation continues to trend up
Private consumption dynamics remain healthy
Foreign direct investment is recovering.
We expect Banxico to hike its policy rate by 75-bps in June
Inflation accelerated despite the consumption tax exoneration
Private employment continues to drive job creation
Private consumption correction is unfolding slower than expected
Employment is edging closer to pre-pandemic levels
Colombians rejected having more of the same
We expect a 75-bp rate hike for June’s meeting
The real wage bill supported retail sales
We expect a current account deficit of 0.6% of GDP for 2022
Manufacturing exports posted its second consecutive fall
Industrial and services sectors supported activity expansion
AMLO’s anti-inflationary plan doesn’t seem to influence CPI (at least for now)
The strength of primary expenditure growth makes it challenging to meet the goal of a primary fiscal deficit of 2.5% of GDP
Hiking more now to try prevent larger hikes later
We forecast a trade surplus of USD 11 billion for 2022.
Our GDP growth forecast for 2022 stands at a modest 2.5%, even with the strong carryover for this year
High interest rates and fiscal consolidation path should support a reduction of external imbalances ahead
First sequential GDP contraction since 2Q20 amid weaker consumption and investment dynamics.
With domestic demand driving the recovery we expect large rate hikes to persist ahead.
Strong domestic demand is offsetting the positive effect of higher oil prices on trade balance.
Still benign terms of trade will support the economy this year
Manufacturing and retail sales recorded better than expected double-digit annual growth in March.
Our inflation forecast for 2022 stands at 70%.
A 50-bp rate hike with a hawkish forward guidance
Industrial production expansion in March was supported by a recovery of construction sector
Slowing exports and import resilience lead to lower trade surplus.
We expect the central bank to hike its policy rate by 50-bps on the Thursday meeting
April CPI with another upward surprise after Central Bank hawkish decision.
Global supply constraints, high commodity prices, positive domestic activity , and a weak COP pressure inflation
Twist! Back to a hawkish surprise with a 125bp hike.
Higher growth, inflation, and rates
Transitory mining boost supports positive activity surprise in March.
We now expect our end of year policy rate forecast at 5.50%
Rates rise as expected, with no end in sight
High oil prices supported fiscal revenues
Upward surprise in sectorial activity data in March driven by manufacturing.
Services and industrial sectors were the main drivers of GDP growth
Unemployment rate rises at the margin as employment slows and labor force increases
Exports and imports associated to the manufacturing sector were soft in March
The real wage bill supports retail sales expansion
Services and manufacturing output are the main drivers of monthly GDP
Banxico will likely continue with its 50-bps rate hike pace in the short term
Our GDP growth forecast for 2022 stands at a modest 2.5%, even with the strong carryover
Elevated terms of trade should contribute to the improvement of Colombia’s external accounts in 2022.
A recalibration of policies or even targets is likely, given the negative impact of higher international energy prices
The energy trade balance deteriorated significantly in the first months of 2022 due to rising prices
Slowing activity dynamics likely means the central bank maintains the 100bp hiking pace
We maintain our inflation forecast at 60%, but the risks are tilted upward.
Risks for our policy rate forecast of 8% are tilted to the upside
In February manufacturing output registered a decent expansion, while mining and construction sectors were a drag
Plan is likely to marginally smooth out the deceleration of the Chilean economy this year
Inflation exceeding expectations raises likelihood of rates ending higher than the 7.5% recently signaled by BCCh
We expect the policy rate at 8.75% by the end of 2022
Imports are slowing as consumption and investment dynamics soften
We expect Banxico to keep the hiking rate pace in the short-term
Internal demand momentum remained positive
Core inflation is rising
Optimistic GDP growth and oil production assumptions are downside risk for fiscal accounts
We expect the BCRP to continue with the normalization of monetary policy
The upcoming economic stimulus package should not materially offset the moderation in economic activity
Private employment led the gains.
Central bank risks falling behind the curve
Rising interest rates, and surging inflation are likely playing a role in dampening consumption activity
Elevated uncertainty and cooling economic prospects may limit job growth ahead Charts in tabs colored in green.
An easing cycle is seen starting during the last quarter of 2022
Future rate increases expected to be smaller than those made in recent quarters
Our GDP growth forecast for 2022 stands at 2.5%.
Manufacturing exports posted a solid sequential growth in February
Sequential activity kept momentum in January.
We now expect the policy rate at 8.75% by the end of this year
Retail sales rebounded on sequential basis in January.
The year-over-year inflation stabilized in the first fortnight of March.
We recently revised our trade surplus forecast for 2022 down to USD 11 billion
We expect activity to lose steam in 2022.
Hiked 200bps to 44.5%. We expect the 28-day Leliq rate to hit 48% by mid-year.
We forecast a reduction in the current account surplus to 0.5% of GDP for 2022, mostly due to a lower trade surplus.
We estimate the primary deficit accumulated over the last 12 months remained unchanged, at 3.0% of GDP excluding SDR allocat
Elevated terms of trade is expected to aid an improvement of Colombia’s external accounts in 2022.
A tighter macro policy mix is expected to significantly slow activity this year
High oil prices will likely curb the current account deficit narrowing this year
Our inflation forecast for 2022 remains at 60% despite our expectation of a slower depreciation of peso.
Retail sales show signs of normalizing
Our GDP growth forecast for 2022 stands at 4.0%.
Given the Congress make-up, the new administration would face governability challenges.
High food and energy commodity prices amid a geopolitical conflict to add further pressure on inflation
High food and energy commodity prices amid a geopolitical conflict to add further pressure on inflation
Rising commodity prices and high levels of indexation will lead to a swift inflation rise in coming months
Weaker mining exports and high energy prices is leading to a swift trade surplus narrowing
While food and energy price pull continues to grow, core inflationary pressures are also on the rise
However, gross fixed investment momentum remained soft
We expect Banxico to hike its policy rate by 50-bps in the March 24 meeting
A worsening of the trade goods balance was the main drag on the current account balance last year
Vehicle exports are seemingly still being affected by the global microchip supply disruption
Final GDP growth figure for 2021 stood at 4.8%
Banxico will likely hike its policy rate again, by 50 bps, at the March 24 meeting
Higher-than-expected inflation makes it more difficult to slow down the pace of rate hikes
However, momentum remained solid in 4Q21
We forecast a trade surplus of USD 15 billion for 2022
Our forecast for primary fiscal deficit stands at 2.5% of GDP for 2022
Our forecast for the 28-day Leliq rate stands at 48% for December.
Robust domestic demand, together with Colombia’s large twin deficits and high inflation support a swift tightening of MP
Our inflation forecast for 2022 remains at 60%.
Robust internal demand and a higher income deficit would offset the positive effect on exports of high oil prices
Fishing, construction, and mining sectors curbed GDP expansion in December.
A strong carryover and favorable terms of trade should support GDP growth of 4.0% for this year
Industrial activity supported mainly by the manufacturing sector
The statement reflected a more cautious view on inflation outlook
We expect a hike of 175-bps in March (to 7.25%) and see a terminal cycle rate of 8.0%.
Higher odds of Banxico increasing the policy rate by 50 bps in February
The more persistent inflationary pressures unfolding will bolster the Board of the CB to keeping responding aggressively
The expectation of softening domestic demand this year will aid a narrowing of the CAD
Consecutive upside inflation surprises will likely prevent the Central Bank from easing the rate hike pace
Despite the improvement in fiscal metrics, a potential recouping of the investment-grade rating is unlikely in the near-term
Gross fixed investment momentum was soft
Slowdown in inflation aided by currency appreciation
The CB’s quarterly monetary policy report revises inflation higher, justifying a swifter withdrawal of the monetary stimulus
The spread of Omicron may contribute to weak growth in upcoming readings
Employment fell sequentially while the participation rate also declining
Mexico’s economy entered into technical recession in 4Q21 with two consecutive quarters of negative growth.
During 2021, unemployment rate fell 1.9pp to 8.9%.
The benefits from fiscal transfers and the reopening of the economy are waning
We expect broadly stable accounts this year
High inflation in an environment of tight monetary policy abroad turns a pace deceleration unlikely in the next meeting.
While more work is necessary to reach a staff-level agreement, we consider the move as positive.
The global microchip supply disruption is likely still affecting vehicle production
We now expect the policy rate to reach 7% by May, 100bps higher than our previous terminal rate call
Remittances and the real wage bill are supporting private consumption
We forecast modest GDP growth of 1.4% for 2022, despite a positive statistical carry of 2.7%
The negative effect from the implementation of a labor reform has faded away.
We expect Banxico to hike its policy rate by 50 bps at the February 10 meeting.
Marcel’s experience with legislative process and markets, and being respected among economists, provides the new administrat
We forecast a primary fiscal deficit of 3.0% of GDP in 2022
We forecast a trade surplus of USD 11 billion for 2022
The domestic demand recovery and higher income deficit is offsetting the positive effect of high terms of trade on exports
Strong terms of trade will support the continued economic recovery ahead
We forecast 60% inflation for this year
Manufacturing subsectors affected by the global microchip supply disruption remain weak
But continued positive momentum for private consumption and gross fixed investment
Core inflation was driven by both core CPI services and goods
Another upside inflation surprise
We expect further interest rate hikes throughout 2022
Most members seem comfortable with a firm monetary policy response
Inflationary pressures to persist in the short term
We expect another 50-bps rate hike in the first monetary policy meeting of the year
The Chilean economy likely grew by around 12% in 2021
Employment gains slow at the margin
A hike of either 100 or 125bps seems to be the most cohesive response for the January meeting.
It is unclear if vehicle export gains will last amid the persistent global microchip supply disruption
The implementation of a labor reform is still affecting services sector (although fading away)
We forecast a trade surplus of USD 14.5 billion for 2021.
We forecast 9.5% GDP growth for 2021.
Persistent inflation points to further rate hikes next year
Most private consumption key determinants are supportive
We forecast a primary deficit of 2.5% of GDP this year, or 4.0% excluding one-off revenues (SDRs and tax on large fortunes).
Temporary tightening of social distancing measures in August affected private demand in 3Q21
The swift recovery of internal demand and higher income deficit is offsetting higher terms of trade.
The divided Board and change in rate hike preferences risks a larger adjustment at the next meeting .
A cautious tone on inflation outlook amid a hawkish Fed point to further rate hikes next year
We revised our GDP growth forecast for 2021, to 9.5% from 8.5% previously
The labor market recovery along with an additional two VAT-free days would support retail dynamism at the close of 2021
However, momentum remain positive in the quarter ended in October
The economy will likely slow significantly ahead, consistent with a contractionary macro policy
The policy rate is expected to remain above neutral over the 2 year policy horizon.
Our inflation forecast for this year remains at 50%, but the inflationary outlook for 2022 has deteriorated.
Industrial production expansion was driven by the manufacturing sector.
We continue to expect a Banxico rate hike of 50-bps in the last meeting of the year.
Imports remain strong, but dynamism is moderating at the margin.
Private consumption rebounded in September as the third COVID-19 wave eased.
High energy prices and the effects of CLP weakness raise tradable inflation.
Domestic demand recovery spurs CAD widening
Manufacturing exports are still affected by the global microchip supply disruption.
A lower trade surplus explained the deterioration in the current account balance.
Three members seem to be open for accelerating the hiking rate cycle.
We now expect GDP growth of 5.3% for 2021.
Fiscal consolidation, which is very likely to be part of an agreement with the IMF, will face significant challenges.
Stubborn inflation supports our call of Banxico hiking its policy rate by 50-bps in December
We see upside risks to our forecast of a trade surplus of USD 13.5 billion in 2021.
We see upward risk to our 8.5% GDP growth forecast for this year.
Retail sales rebounded as social distancing measures were eased
Easing of social distancing measures supported rebound of activity
Increasing CAD on recovering imports and FDI profits
Greater mobility during 3Q likely compensated for a higher base of comparison for activity last year
The reopened economy and sustained stimulus from monetary policy will sustain upbeat activity dynamics in the short-term
Improving exports will contain further trade deficit widening ahead
We now expect a 50-bps rate hike in the next monetary policy meeting (December 16)
We see mounting upward risk to our inflation forecasts of 49% for 2021 and 50% for 2022.
Looser mobility restrictions supported activity in 3Q
Weak monthly industrial production reaffirms activity in 3Q21 deteriorated
We kept our 25-bp rate hike call for the next Banxico meeting on Thursday
Imports are dynamic across the board
one-off effects will fade over time, resulting in 2022 inflation remaining above the target
Private consumption was affected by the third COVID-19 wave
With the economy reopened, the push from food and energy prices is meeting rising service inflation
Monitoring the evolution of inflation expectations will be key in determining the required policy adjustment ahead
GDP growth likely to exceed our 10.8% call for 2021
Higher inflation reinforces our call of the BCRP taking its the policy rate to 2.50% end of year 2021
Monetary and fiscal stimuli, progress on the vaccination front, and favorable terms of trade will support recovery ahead
The durable goods pull to activity is moderating as favorable base effects fade
Labor gains are mostly informal
GDP deterioration is associated to a temporary resurgence of the outbreak and a negative activity measurement effect
Amid rising risks to inflation, we expect the Central Bank to move to a contractionary stance
We now expect a trade deficit of USD 5 billion for 2021
The monthly GDP proxy was dragged by services sector affected by the third COVID-19 wave
Large core inflation upside surprise in 1H October
There are upside risks to our forecast for a trade surplus of USD 12 billion in 2021
Recently, we raised our GDP forecast to 7.8% (vs. 7%).
We adjusted our forecast for the primary fiscal deficit downward, to 2.5% of GDP from 3.5%.
Retail sales was mildly affected by the tightening of social distancing measures in August
The swift recovery of internal demand and higher income deficit would offset the positive effect on exports of high terms of
High terms-of-trade, fewer mobility restrictions and expansionary policies are supporting GDP recovery
The further reopening of the economy supported the improvement in economic activity
We are keeping our full-year inflation forecast at 49% despite the government’s recent decision to freeze prices
There is a possibility of accelerating the pace of hiking rates if inflation outlook deteriorates further
Another hawkish surprise from the Central Bank of Chile
The rising pull from tradables in part reflects CLP pass-through
Import dynamism is set to remain upbeat for the time-being Amid elevated stimulus
We expect two more rate hikes (of 25-bps) this year amid high inflation
The expected services recovery and ongoing supply constraints point to persistent inflationary pressures
Soft growth in private consumption is likely reflecting the start of the retightening of social distancing measures
Uncertainty over transitory nature of inflationary pressures
On an annual basis, inflation accelerated further in the 1H of September.
We forecast a trade surplus of USD 12 billion for 2021, slightly down from USD 12.5 billion in 2020.
We anticipate further deterioration of the fiscal accounts in the coming months
We forecast 7% GDP growth for 2021.
Domestic demand recovered further reflecting the reopening of the economy.
We forecast a current account surplus of 0.8% of GDP for 2021
A still-favorable external environment, fewer mobility restrictions and expansionary macro policies will support a swift GDP
We recently revised our GDP growth forecast to 11.0% in 2021, compared to our previous scenario of 10.2%.
50-75bp rate hikes to persist for the time being
We adjusted our inflation forecast for this year up to 49% from 47 in our previous scenario.
Sectors affected by the global microchip supply disruption showed some recovery
Mild fiscal reform included aimed at reducing informality in SME’s
High inflation is consistent with further rate hikes ahead
Under pressure global supply-chains, and expanding domestic consumption will keep inflation elevated
The effect of rising pressures on inflation expectations will support the start of rate hikes.
Internal demand indicators are still below pre-pandemic levels
Suspension of protests and economic reopening support the activity recovery
The policy rate will likely end this year close to (or at) 3.0%
Increasing inflationary pressure supports the BCRP continuing with its normalization cycle
Chile's economy grew by 18.1% YoY in July, again driven by consumption.
Central Bank hikes the policy rate by 75-bps and delivers a hawkish statement
Job creation reflected the economic reopening
Targeted government programs to encourage formal job creation would likely support a further employment recovery ahead
Our base case scenario is for a 25-bps rate hike in September
Chile’s consumption-led recovery marches on, driven by another surge in retail sales
Vehicle exports seem are still affected by the global microchip supply disruption
One board member who backed a rate hike is considering the possibility of a pause
A lower trade services deficit supported the improvement
Services sector supported the GDP expansion amid the reopening of the economy
Core inflation accelerated further in the 1H of August
We forecast a primary deficit of 3.5% of GDP, below the budgeted amount of 4.5% of GDP
Still, momentum remained positive in the 2Q21
We forecast a trade surplus of USD 12 billion for 2021, slightly down from USD 12.5 billion in 2020
We recently revised our GDP growth forecast for 2021 up to 7.0%
The rising income deficit, amid favorable mining conditions, points to a larger deficit ahead
The rapid economic reopening underway will support activity momentum in 3Q
With protest subsiding, activity concluded the quarter with a significant rebound
Annual growth is still reflecting a favorable base effect
The swift recovery of internal demand and higher income deficit would lead to a large CAD this year
We maintain our forecast of 47% inflation for 2021, with risks tilted to the upside
The convergence of inflation to the central bank target was further delayed
The global supply microchip disruption seems is still affecting the manufacturing sector.
Core food and services CPI exerted upward pressure to core inflation
Inflation expectations are likely to keep rising
The third COVID-19 wave is a downside risk to internal demand recovery
A partial normalization is the preferred route amid elevated levels of uncertainty
We now expect the central bank to start hiking its policy rate as soon as next meeting
The buoyant activity data is unlikely to alter the 25bp pace of rate hikes for the time-being
The expected activity recovery during 2H21 would aid an employment improvement
Signaling a gradual cycle ahead with a preference for retaining some stimulus
Large stimuli and a favorable external environment will support a recovery consolidation during 2H21
Medium-term risks and current uncertainty support a cautious approach
Services sector grew at a strong pace boosted by the reopening of the economy
Public debt fell further amid a higher GDP base
Global microchip shortage is likely still affecting manufacturing exports
Sequential GDP expansion was driven by services sector
Large annual growth reflects a favorable base effect
Higher interest rates ahead are likely
We forecast a trade surplus of USD 14 billion for 2021, up from USD 12.5 billion in 2020
We forecast GDP growth of 6.5% for 2021, from a 9.9% decline in 2020.
We forecast a primary deficit of 3.8% of GDP
With blockades lifted in June, exports and imports are both likely to rebound
Disinflation is coming at the cost of higher distortion of relative prices.
The downturn is expected to be transitory as protest action has since been suspended, mobility restrictions lifted and the v
Annual growth in monthly GDP was boosted by a favorable base effect
Enhanced fiscal impulse supports increasing rates.
Manufacturing output is likely still affected by the global semiconductor supply shortage
We expect Banxico to hike its policy rate by 25-bps in August amid inflationary pressures
Elevated global oil prices and added liquidity injections would pressure inflation in coming months
We reduced our 2023 GDP growth forecast to 0.9% (previously at 1.8%).
We now forecast a policy rate of 9.25% for YE22
Impact of anti-inflationary plan seems limited
Radical changes to energy policy are not completely dead.
Negative trade exposure to oil shocks
Higher rates amid weaker activity outlook
Comfortable with a firm monetary response
Accelerating the monetary policy normalization pace
We now expect the policy rate at 7.00% by the end of 2022
Supply shocks curb GDP recovery
Risk of a pause in the short term
Normalization cycle continued
Inflationary pressures intensify
AMLO reduced its political power in Congress.
The microeconomic policy direction continues to generate uncertainty.
Nationalistic initiatives in the energy sector persist.
A market-unfriendly energy reform was approved by Congress
Banxico resumed rate cuts
A sharp exchange rate weakening, but global drivers keeps the central bank at bay
We expect a policy rate peak of 10%, before a rate-cut cycle is initiated during 2023
Inflation and rates revised higher.
Higher-than-expected inflation will likely lead the central bank to hike beyond its baseline scenario
Higher inflation amid slowing activity leaves a challenging rates scenario
With high inflation, the Central Bank is expected to bring the policy rate to 8% in coming months
Risks are tilted toward a more extensive monetary tightening cycle
Volatility is likely to remain elevated
After an unprecedented growth snapback this year, a major slowdown awaits ahead
Higher interest rates ahead
As the economy steams ahead, supportive policy mix winds down.
We expect a swifter normalization cycle than currently being signaled
Swift vaccination has allowed for the loosening of mobility restrictions
COVID-19 cases and ICU loads continue to surge, despite significant progress on the vaccination front.
Vaccination rollout slowed during April amid supply constraints, and focus shifted to completing the dual-dose program.
Nearly half of the adult population in Chile has received at least one vaccine dose.
Ample vaccine supply and sustained inoculation pace mean that Chile is set to complete the immediate target
Challenging task of keeping fiscal accounts in check while advocating for an ambitious social spending program
With uptrending core inflation, robust economic activity and a widening of external imbalances
Growth revised higher, while inflation pressures persist
Despite rising inflationary pressures, the Central Bank is unwilling to accelerate the pace of monetary policy tightening
The incoming Congress will be fragmented, and the executive branch will need strong negotiation skills to advance a legislat
The evolution of inflation expectations to recent surprises will be key in determining the pace of rate hikes ahead
The evolution of the current-account deficit, inflation and activity dynamics will determine the need for a more aggressive
Strong domestic demand will see a widening CAD
With the economic reopening, inflation high, and twin deficits support, rate hikes of 50bps are expected ahead
Rate cycle pace to depend on inflation expectations
With inflation registering big upside surprises and external imbalances increasing, monetary stimulus will be reduced
The consolidation of the economic reopening have led us to increase our growth forecast
Tightening of financial conditions, and a divergence of inflation expectations could bring forward the start of the normaliz
A downgrade by Fitch in the coming weeks (also to below investment grade) is possible
Tax reform dilution prevents significant fiscal consolidation and credit rating downgrades become more likely
A structural tax reform is a key prerequisite to maintain investment grade rating
We see increased risks of lower activity and higher inflation as internal political tensions
Argentina risks missing the targets agreed to with the IMF
Inflation and inflation expectations deteriorated markedly in the face of growing political tensions amid the ruling coaliti
We maintain our base scenario of high inflation and modest growth
Argentina and the IMF reached a staff-level agreement
The government and the IMF reached an understanding on key economic policies for a new program.
The negotiation with the IMF looks stuck and the probability of entering into arrears is high.
A rapid understanding with the IMF looks challenging.
The negotiations over a needed new agreement with the IMF will test the cohesion of the ruling coalition
Heightened uncertainty and the risks of failure to reach a deal with the IMF have increased
The government suffered a major defeat in the primary legislative elections.
Uncertainties increased as legislative elections approach.
The Minister of the Economy said the country has gained a “time-bridge” to conclude a needed agreement with the IMF
Our baseline scenario assumes an agreement with the IMF after the mid-term elections, adjusting macro policies somewhat.
Difficulties in advancing with fiscal consolidation
Macroeconomic policies will likely lead to increased distortions
Political turmoil persists
We lowered our GDP growth forecast to 3.0% (from 3.5% in our previous scenario)
Castillo intends to establish a constituent assembly
Castillo survived a second ousting attempt from Congress amid social unrest
Geopolitical conflict pressures CPI outlook
Four cabinets in six months
Monetary policy normalization continues
Confrontation between the executive power and Congress is unlikely to dissipate
Policy uncertainty is likely to persist
Higher rates amid increasing inflationary pressures
Responsible new fiscal plan, but risks remain
The BCRP kicks off its normalization cycle
A new left-wing government is likely coming
Fragmented Congress likely to make governability a challenge
Polls suggest six candidates could slip through in the first two places and then participate in the second round
We raised our GDP growth forecast for 22 to 4.9% (from 4.5% in our previous scenario), following the solid activity.
We raised our YE22 policy rate forecast to 8.25%, from 7.75% in our previous scenario.
We expect activity to recover during the rest of the year as the negative effect from the drought in 1Q22
Activity is likely to slow down in the second half of 2022, given soft GDP growth expected in Argentina and Brazil.
We revised our GDP growth forecast for 2022 to -1.0%, from our previous scenario of -1.7%.
Activity expands further, pointing to further monetary policy tightening
Higher inflation leads to higher interest rates.
Our inflation forecast for 2022 is now at 8.0%, driven by higher commodity prices.
We now foresee the monetary policy rate at 6.50% by the end of this year, given the deteriorating inflation outlook
An historically severe drought to hit activity hard
Further rate hikes ahead
We now expect GDP growth of 4.2% for full-year 2021, from our previous scenario of 3.0%.
We revised our GDP growth forecast downward, to 0.5% for 2022 (compared with our previous scenario of 3.0%),
We now anticipate a policy rate of 8.50% at the end of next year (compared with our previous scenario of 8.00%).
A tighter monetary policy stance, lower commodity prices and a slowdown of internal demand will help to reduce inflation
Inflationary pressures led to a bolder response from the central bank.
Stubborn inflation calls for higher rates.
We reduced our interest rate forecast for the end of this year to 5.5% from 6.0% before.
Given increasing inflationary pressures we now expect inflation at 6.3% for end of this year and the reference rate at 3.0%
Faster policy rate normalization due to higher inflation
We expect GDP growth of 3.0% for this year, supported by high terms of trade and a further reopening of the economy.
We now see the BCU reference rate at 6.0% in December 2021 (from 5.5% in our previous scenario).
We raised our GDP growth forecast to 5.0% for 2021 (from our previous scenario of 4.5%).
Daily COVID-19 cases and deaths have plummeted in the last month due to the high percentage of vaccinated individuals.
We increased our GDP growth forecast to 4.5% for 2021 (compared with our previous scenario of 3.5%)
Struggling with the second wave.
Still-High COVID-19 contagion despite fast vaccination progress
Transitory fiscal relief as headwinds mount
An election unfolding amid dissatisfaction with the status quo
We expect the incoming administration to face pressure to loosen the fiscal consolidation path set out in the 2022 budget
The president’s economic team will play a key role in negotiating the breadth, depth and timing of the ambitious structural
Chile is in the process of drafting a new Constitutional text
Polarizing election to keep uncertainty elevated
The fiscal consolidation strategy outlined in Chile’s budget bill for 2022 is ambitious
The MoF is likely to auction roughly an additional USD 9 billion during September-December 2021
A full GDP recovery will likely be achieved in 2021 in most developed countries, but not until 2022 or later in EMs (ex. Chi
International commodity prices have decoupled from the currencies of countries that export these products.
Elevamos nuestro pronóstico de tasa de política monetaria a 8,25%, desde 7,75% en nuestro escenario anterior.
Elevamos nuestra previsión de crecimiento del PIB para 2022 a 4,9% (desde el 4,5% en nuestro escenario anterior)
Escenario desafiante de mantener las cuentas fiscales bajo control mientras se aboga por un ambicioso programa de gasto soci
Banco Central decide no intervenir por el momento, destacando el buen funcionamiento del mercado financiero
El próximo gobierno enfrentará una elevada inflación, aumento de las demandas sociales e importantes desequilibrios fiscales
Mayores estimaciones de crecimiento y de la inflación
Esperamos que la actividad se recupere durante el resto del año
Mantuvimos nuestra previsión de crecimiento del PIB para este año en 4,5%.
Inflación y tasas más altas en medio de mejores perspectivas de actividad
La actividad se sigue expandiendo, abriendo espacio para un mayor endurecimiento de la política monetaria
Inflación presionada lleva a tasas de interés más altas
Mayor crecimiento y mayor inflación para 2022
Inflación mas alta de lo esperada llevaría al Banco Central a elevar la tasa de política mas allá de su escenario base.
La izquierda gana terreno en un Congreso dividido
Ahora proyectamos la tasa de política monetaria en 6,50% para fines de este año
El referéndum sobre la Ley de urgente consideración (LUC) se realizará el 27 de marzo
El Congreso entrante quedó aún más fragmentado, y el próximo gobierno necesitará una gran capacidad de negociación si quiere
Mayor inflación, en medio de una desaceleración de la actividad, deja un escenario de tasas desafiante.
Una sequía históricamente severa golpeará duramente la actividad.
Ahora esperamos la tasa de política en 9,50% para fines de este año, en comparación con nuestro escenario anterior de 8,50%.
Las sorpresas consecutivas de inflación al alza apunta a una prolongación del ciclo de contracción de la política monetaria
Dada la elevada inflación, el Consejo del Banco Central llevará la tasa de política monetaria a 8% en los próximos meses
Revisamos al alza nuestra previsión de PIB para 2021 a 4,2% desde 3,0% en nuestro escenario anterior.
Revisamos nuestro pronóstico de crecimiento del PIB a 0,5% para 2022 (en comparación con nuestro escenario anterior de 3,0%)
Riesgos hacia un mayor ciclo de ajuste monetario
Inflación al alza, se eleva trayectoria de tasas
Prevemos la tasa de política monetaria en 5,75% para fines de 2022 en un contexto de tasas más altas en el exterior
La agencia de crédito Fitch mantuvo la calificación BBB-, mejorando la perspectiva a estable desde negativa
Las presiones inflacionarias ilevaron a una firme respuesta del BCP
Inflación obstinada exige tasas más altas.
El ciclo de normalización de la política monetaria debería continuar en los próximos meses con movimientos de 50pb.
Tras un dinamismo sin precedentes del crecimiento este año, la economía enfrentaría una gran desaceleración en 2022
Ahora esperamos una inflación de 6,3% y una tasa de política alcanzando un nivel de 3,00% a fines de 2021.
Ahora esperamos que la tasa de política finalice 2021 en 5,50% (en comparación con nuestro escenario anterior de 6.00%)
Tras las sorpresas al alza en actividad, ahora esperamos que la economía colombiana se expanda 8,8% este año
Sesgos al alza en la inflación impulsarían nuevas alzas de tasas
Normalización de la tasa de política monetaria más rápida debido a una mayor inflación
Esperamos un crecimiento del PIB de 3.0% para 2021, respaldado por términos de intercambio y una reapertura de la economía
Con la inflación registrando sorpresas al alza y aumentando los desequilibrios externos, se reducirá el estímulo monetario
Mientras la recuperación económica se consolida, el mix de política se torna menos expansivo
Elevamos nuestro pronóstico de crecimiento del PIB al 5.0% para 2021 (desde nuestro escenario anterior de 4.5%).
Ahora vemos la tasa de referencia del BCU en 6,0% en diciembre de 2021 (desde 5,5% en nuestro escenario anterior).
La consolidación de la reapertura económica nos ha llevado a incrementar nuestra previsión de crecimiento
Esperamos un ciclo de normalización más rápido que el señalado actualmente.
Otra reducción de la calificación
Comienza el proceso de alzas de tasa
Acercándose a una nueva normalidad
Mejores perspectivas para la activida
Contagio de Covid-19 aún alto a pesar del rápido progreso de la vacunación.
En medio de la recuperación, las materias primas sostienen los activos de los mercados emergentes.
Luchando con la segunda ola
Mayor brecha entre MD-ME
Las consolidación fiscal luce más desafiante
La segunda ola sigue golpeando fuerte