Growth is still expected to improve in 2013; however, we revise lower our projection to 3.2% from 3.8%
• Inflation dynamics are worrisome, even though we expect headline IPCA to slow in H2-2013
• We think the BCB needs to hike rates; however, mark...
Growth will likely improve in 2013, but risks are to the downside; the supply-demand mismatch continues
• The government will seek alternative fiscal measures to manage inflation; BCB to avoid hiking in 2013
• We recommend a Jan-15 DI receiver pos...
• Economic activity continues to expand significantly, with another strong year expected in 2013
• A strong pipeline of energy and mining projects fuels growth
• We think BCRP will employ more measures to counter PEN appreciation
• President Ol...
We lower our 2012 and 2013 growth projections to 1.1% and 3.8%, from 1.5% and 4.1%, respectively
• Nonetheless, we still foresee improved activity in 2013, and a steady closure of the output gap
• We see the COPOM on hold in 2013, but we remain ne...
• For the first time, President Chavez has designated a successor
• His announcement leads Venezuela into another period of political uncertainty
• Any adjustment to the exchange rate is likely to be delayed as a result of the unclear political b...
Our meetings in Brazil left us with a less optimistic view on 2013 growth
• If GDP growth falters, we would not be surprised to see the SELIC rate fall further
• The BRL should continue to be range-bound in the near term
• We maintain our recomme...
We revise 2012 GDP growth lower to 1.5%, while maintaining 2013 forecast at 4.1%
• We revise IPCA inflation slightly higher for 2012 and 2013 to 5.3% and 5.6%, respectively
• The minutes of the 10 October meeting show that the current rate-cutting...
Despite the recent spike in headline inflation, we look for no change to monetary policy near-term
• Recent currency strength is a function of global liquidity conditions
• New government is likely to push a reform agenda in 2013, focused on energ...
Local-currency emerging bond markets have seen ever greater levels of foreign demand as global investors flee from the ongoing European sovereign crisis and continue to allocate to fixed income securities. From less than USD 150bn in March 2009, for...
We recently revised our Latam FX forecasts in the wake of the Fed’s QE3 policy announcement
• While QE has historically been positive for Latam currencies, we observe clear diminishing returns
• Regional central banks will fight USD weakness, exc...
President Santos has announced plans to negotiate with the FARC movement
• The peace talks will be the government’s main focus in the months ahead
• The economy is growing at a trend pace, while inflationary pressures are generally muted
Top 3 data/events
• Philippines –Trade balance to benefit from export growth
• Hong Kong – August exports unlikely to show any signs of recovery
• Brazil – Focus on data ahead of key October COPOM meeting
• Market focus
• Higher-yielding marke...
How have growth and inflation done in the different economies in Latin America?
• In this presentation, we look at current macro and political conditions in the region
• While the region is generally well cushioned, the degree of exposure to exter...
International food prices have spiked over the last month-and-a-half
• The 10% increase in the CRB food index could have a relevant impact on IPCA inflation
• Continued pressure on food prices could eventually impact monetary policy decisions...
Economic backdrop is worsening, with stagflation in view in the months ahead
• Public-sector financing needs appear manageable in the short term
• We do not expect a major one-off devaluation, although worries persist about an official dual FX sys...
The record-low SELIC rate should be adjusted even lower in the upcoming months
• BCB is vindicated by sub-5% inflation, weaker-than-expected growth and the messy global backdrop
• We expect the BCB to refrain from aggressive tightening in 2013, ev...
We dissect past cases of currency breakups to shed light on today’s debate about the euro area’s future
• Political support across the euro area is under pressure; this was a key break-up factor in the past
• Stronger countries can make or break ...
Growth dynamics remain very disappointing; we revise down our GDP forecasts for 2012 and 2013
• While the inflation outlook remains benign for 2012, it may change in 2013 when activity picks up
• Nonetheless, the government is eager to keep the S...
China’s protein boom has invigorated China-Brazil trade, with soy imports to exceed USD 32bn in 2012
• We travelled to Parana in Brazil and Rosario in Argentina to see the soy farms and processing plants
• Argentina is especially vulnerable to a s...
Policy minutes send a mixed message, highlighting domestic strength versus weakness abroad
• Inflation pressures appear broadly muted
• International shocks can hit Chile rapidly, as it is a particularly open economy
• Consequently, we call for r...
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The world economy is in transition. Global growth rates are picking up, but transition means elevated risks and volatility.
In terms of global implications, all eyes will be on the US and China, with the US normalising monetary policy and China rebalancing its economy.
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