20180925-法国巴黎银行-Latin_America_Week_Ahead_12页_435kb

Latin America Weekly Market Economics Summary (24 September – 30 September 2018)

Core Content Overview

This summary outlines the key economic events and developments across major Latin American countries during the week of 24 September to 30 September 2018. It focuses on central bank policies, inflation trends, trade balances, elections, and fiscal outlooks, with an emphasis on Brazil, Mexico, Argentina, Colombia, and Chile.

Key Events and Developments

Brazil

• COPOM Minutes & Inflation Report: The central bank (BCB) kept interest rates at 6.5% for the fourth consecutive time. The policy statement highlights the unsustainable combination of currency and rates. The next meeting will occur after the October election, with potential policy changes.
• Election Polls: The first round of voting is scheduled for 7 October. New polls, including Datafolha, show a tight race. The Workers Party (PT) has replaced Lula with Fernando Haddad.
• Economic Reports:
  • External Sector, Credit, and Fiscal Reports will be released throughout the week, with the fiscal report expected to show improved discipline.
  • CPI and Core Inflation: The annual CPI is forecast to decelerate slightly to 4.84% y/y, while core inflation is expected to remain at 3.6% y/y.
  • Manufacturing and Construction: Manufacturing growth is expected to expand, and construction costs may rise slightly.
• Trade Balance: The trade balance is expected to narrow, with a projected 12-month deficit of USD 10.1bn.

Mexico

• NAFTA Talks: The final draft of the new trade deal is due by 30 September. Disagreements remain over dairy industry protections and settlement panels.
• Inflation Data: CPI is expected to decelerate to 4.8% y/y, with core inflation at 0.18% bw/bw.
• Economic Activity: The economic activity index is expected to show a slight improvement.
• Monetary Policy: The central bank (Banxico) is likely to maintain a tight monetary stance, with no rate changes expected.
• Trade Balance: The trade deficit is expected to widen further, reaching USD 15bn for the 12-month period.
• Unemployment: Unemployment is expected to remain around 3.3%–3.5%.
• Fiscal Reports: The fiscal report for August will highlight the need for fiscal discipline to meet the primary surplus target of 0.8% of GDP.

Argentina

• IMF Talks: Progress is expected in negotiations with the IMF to front-load disbursements and potentially increase the arrangement's size.
• Trade Balance: The trade balance is likely to narrow in August, with a forecast of USD -0.2bn.
• Economic Activity: Real GDP is expected to contract further in July, with a forecast of -5.7% y/y.
• Current Account Deficit: The Q2 current account deficit is expected to be USD -6.8bn, with a projected 2018 deficit of USD 21bn.
• Consumer Confidence: The consumer confidence index is expected to deteriorate due to elevated CPI.

Colombia

• Tax Reform: Prospects for a broad tax reform have soured due to accusations against the Finance Minister, Alberto Carrasquilla.
• Business Confidence: Both retail and industrial business confidence have improved, and the tracker is expected to moderate slightly but remain positive.
• Monetary Policy: The central bank (BanRep) is expected to keep rates on hold, with no changes anticipated until mid-2019.
• Economic Activity: The economy is expected to show a gradual recovery, with a forecast of 2.3% y/y growth.
• Trade Balance: The trade deficit is expected to widen further, reaching USD 15bn for the 12-month period.
• Unemployment: National unemployment is expected to rise to 9.7%, with urban unemployment at 10.1%.

Chile

• Manufacturing Production: The August manufacturing report is a key highlight, with an expected 1.3% y/y expansion.
• Monetary Policy: The central bank will release minutes from its September meeting, but they are unlikely to provide significant new insights.
• Economic Reports: The central bank will also release a traders' survey, along with industrial production and unemployment data.

Economic Calendar Highlights

• Mon 24/09:
  • Brazil: Central bank weekly economists survey
  • Mexico: Bi-weekly CPI and core CPI
  • Chile: PPI m/m and traders survey
• Tue 25/09:
  • Brazil: COPOM meeting minutes, FGV construction costs
  • Mexico: Unemployment rate
• Wed 26/09:
  • Argentina: Trade balance, economic activity index
  • Brazil: Credit report, tax collections
  • Colombia: Retail and industrial confidence
• Thu 27/09:
  • Argentina: Current account balance, wages
  • Brazil: Q3 inflation report
  • Mexico: Trade balance
• Fri 28/09:
  • Brazil: Primary and nominal budget balances, net debt % GDP, consumer confidence
  • Chile: Manufacturing production, unemployment
  • Colombia: National and urban unemployment

Key Themes

• Inflation Management: Central banks in Brazil, Mexico, and Colombia are closely monitoring inflation trends and adjusting policies accordingly.
• Economic Uncertainty: Political developments, such as Brazil's presidential election and Mexico's NAFTA negotiations, add uncertainty to the economic outlook.
• Fiscal Discipline: Fiscal reports in Brazil and Mexico highlight the need for tighter monetary and fiscal policies to meet targets and stabilize the economy.
• Trade and Investment: Trade balances and confidence indicators are key factors in assessing economic performance and future growth prospects.

Conclusion

The week ahead in Latin America will be marked by economic data releases, policy decisions, and political developments. Brazil and Mexico are central to the focus, with the former preparing for an election and the latter nearing the final stages of NAFTA negotiations. Argentina and Colombia face challenges in fiscal and structural reforms, while Chile continues to monitor manufacturing and confidence indicators. Overall, the region is expected to see a mix of stability and uncertainty as it navigates economic and political transitions.