20171211-法国巴黎银行-Latin_America_Week_Ahead__10页_299kb

Summary of Latin America Weekly Market Economics Report - 11 December - 16 December 2017

Core Content

This report outlines key economic events and central bank policy expectations across Latin America for the week of 11 December to 16 December 2017. It provides insights into inflation trends, monetary policy decisions, and political developments that may influence economic outcomes.

Key Events Overview

Brazil

• Main Highlight: Copom minutes (to be released on Tuesday) will provide insight into when the central bank may end its rate-cutting cycle.
• Policy Rate: The Selic rate is expected to be cut by 50bp to 7.0% and may see another 25bp cut in February.
• Terminal Rate Forecast: The terminal rate is forecasted to be 6.5%.
• Retail Sales: Expected to show a modest monthly increase of 0.2% m/m, with annual growth at 4.7%.
• Industrial Production: The services sector volume is expected to decline by -3.2% y/y in October, while retail sales broad are forecasted to grow at 8.7% y/y.

Mexico

• Main Highlight: Banxico is expected to remain on hold, but risks of a rate hike are significant.
• Inflation Trends: Recent inflation data has deviated from the previous forecast, with core components showing upward trends.
• Industrial Production: Expected to return to positive territory in October, growing at 0.9% y/y, driven by manufacturing (3.5% y/y) and exports to Europe and Asia.
• Wages: Continued downward trend, below inflation levels.
• Election Tracker: Frente Ciudadano coalition faces a critical moment in choosing its presidential candidate.

Colombia

• Main Highlight: BanRep is expected to keep rates steady, with the policy rate at 4.75%.
• Economic Policy: The central bank is likely to delay rate cuts to maintain stability, as inflation and core components have increased.
• Retail Sales: Expected to grow at 2.1% y/y in October, up from 1.4% in September.
• Industrial Production: Expected to rise slightly to 0.4% y/y in October, but remains limited by weak domestic demand.
• Election Tracker: Centro Democrático will finalize its presidential candidate selection before the end of the year.

Chile

• Main Highlight: BCCh is expected to keep rates on hold, with the base case scenario assuming a stable policy rate in the short term.
• Inflation Outlook: Inflation is expected to remain near 1.9% y/y, with little tolerance for downside surprises.
• Rate Normalisation: The central bank may begin a rate hiking cycle in Q2 2018, with a forecast of 100bp hikes over the year.

Argentina

• Main Highlight: The November CPI report and BCRA's monetary policy meeting are key events.
• Inflation Forecast: CPI is expected to moderate to 1.1% m/m in November, with core inflation at 1.3% m/m.
• Annual Inflation: Forecasted to decline to 22.9% in 2018, slightly above the 17% target.
• Policy Rate: BCRA is expected to keep rates steady, with rate cuts likely to start in late Q2 2018.
• Unemployment: The Q3 unemployment rate is forecasted to decline further from 8.7% in Q2.

Economic Calendar Highlights

Key Economic Indicators

• Brazil: Retail sales are expected to grow at 4.7% y/y, with a slight monthly increase of 0.2% m/m. Industrial production is expected to rebound slightly.
• Mexico: Industrial production is expected to return to positive territory, with manufacturing growth at 3.5% y/y. Wages are trending lower.
• Colombia: Retail sales are forecasted to rise to 2.1% y/y, while industrial production is expected to grow by 0.4% y/y.
• Chile: Inflation is expected to remain near 1.9% y/y, with the central bank showing little tolerance for further declines.
• Argentina: CPI is expected to moderate to 1.1% m/m, with annual inflation projected to fall to 22.9%.

Political Developments

• Brazil: Negotiations over the social security reform bill are ongoing, with a vote expected on 18 December.
• Mexico: Frente Ciudadano coalition is in a critical phase of selecting its presidential candidate.
• Colombia: Centro Democrático is expected to finalize its candidate selection before the end of the year.

Market Outlook

• Central Banks: Most are expected to maintain current rates, with potential for rate cuts in late 2017 or early 2018.
• Inflation Trends: Inflation is expected to moderate across the region, though still above targets in some countries.
• Economic Activity: Growth is uneven, with some sectors showing improvement while others remain weak.

Analysts and Coverage

• The report is produced by the Latam Market Economics team of BNP Paribas.
• Key analysts include:
  • Marcelo Carvalho (Brazil)
  • Gustavo Arruda (Brazil)
  • Florencia Vazquez (Argentina, Chile)
  • Luiz Eduardo Peixoto (Mexico, Colombia, Brazil)

Legal Notice

• This document is non-independent research and may be subject to conflicts of interest.
• It is intended for Relevant Persons as defined under MiFID and other financial regulations.
• BNP Paribas and its affiliates may be involved in transactions related to the securities mentioned.
• The information is not investment advice and should not be relied upon as such.