20180109-法国巴黎银行-LATAM_MACROECONOMIC_OUTLOOK__CONTENTS_95页_2mb

LATAM CHARTBOOK: Summary

Core Content Overview

This document provides a comprehensive macroeconomic outlook for Latin America in 2018, focusing on key countries: Brazil, Mexico, Colombia, Argentina, and Chile. It highlights economic trends, inflation, monetary and fiscal policies, elections, and business environment challenges.

Main Points by Country

Brazil

• Growth Recovery: Brazil's growth is expected to recover in 2018, with the market consensus aligning with BNP Paribas' outlook.
• Inflation: Inflation has fallen below the target for the first time in many years, with expectations converging to the target range.
• Monetary Policy: The central bank (BCB) has room for rate cuts, as inflation moderates and growth concerns ease.
• Debt Dynamics: Debt servicing is becoming a smaller share of disposable income, indicating improved financial conditions.
• Pensions: High pension spending relative to demographics poses a challenge for fiscal sustainability.
• Non-Performing Loans: NPLs are expected to moderate with the economic recovery.
• Elections: Brazil's presidential elections are scheduled for May and October 2018, with the second round on October 28th.
• Business Environment: Brazil faces significant challenges, including high taxes, complex systems, poor infrastructure, and labor laws that hinder business operations.

Mexico

• Growth Moderation: Growth is expected to moderate in 2018, with the economy showing resilience.
• Monetary Policy: Rate hikes are expected to slow economic activity, with the central bank (Banxico) likely to maintain a cautious stance.
• Inflation: Core inflation is above target but moderating, with expectations well-anchored.
• Fiscal Policy: Fiscal balances are improving, driven by higher revenues and reduced spending.
• FDI and Trade: FDI has been resilient, but the trade deficit, especially due to oil, remains a concern.
• Elections: Mexico's general elections are on July 1, 2018, with a competitive race expected.
• NAFTA Negotiations: Ongoing negotiations are expected to be complex, with several rounds planned before the end of 2018.
• Business Environment: Mexico's business environment is improving, but challenges such as corruption, bureaucracy, and crime persist.

Colombia

• Economic Adjustment: Colombia's economy is adjusting to a new reality, with domestic demand slowing.
• FDI Diversification: FDI has diversified beyond the oil and mining sectors, supporting overall investment.
• Inflation: Core inflation is above target but showing signs of moderation.
• Fiscal Policy: Compliance with fiscal rules requires reforms and budget cuts.
• Elections: Colombia's legislative and presidential elections are scheduled for March and May-June 2018.
• Business Environment: Colombia's business environment is relatively stable, with a preference for centre-right candidates historically.

Argentina

• Growth Recovery: Argentina has seen a full year of real GDP growth, with expectations of continued expansion in 2018.
• Inflation: Inflation is declining gradually, with official targets aligning with consensus forecasts.
• Fiscal Policy: The central bank (BCRA) has limited room for rate cuts due to inflation expectations remaining above target.
• Elections: Argentina's mid-term elections are expected to boost investment in 2018.
• Business Environment: Argentina faces challenges related to inflation, taxes, and fiscal sustainability.

Chile

• Growth Acceleration: Chile is expected to see growth acceleration in 2018 and 2019.
• Inflation: Inflation has moderated, with the central bank (BCCh) likely to keep rates on hold.
• Confidence: Consumer confidence has improved slightly, while business confidence lags behind.
• Inflation Dynamics: Non-tradable inflation is at the target, but tradable inflation is rising.
• Business Environment: Chile has a relatively better business environment compared to other Latin American countries.

Key Information and Trends

• Global Context: The global economy is in an upturn with gradual removal of monetary accommodation. The USD is expected to peak, which can improve sovereign ratings in emerging markets.
• Elections: A heavy election calendar in 2018 includes legislative and presidential elections in Brazil, Colombia, and Mexico, which could influence economic policies and stability.
• Commodity Exposure: Latin American economies are heavily influenced by commodity prices, with Brazil's currency strongly correlated to international prices.
• Fiscal Challenges: All countries face fiscal challenges, with Brazil and Argentina showing particularly high pension and tax burdens.
• Monetary Policy: The Taylor rule suggests room for rate cuts in Brazil and Chile, while Mexico is expected to maintain a cautious stance due to inflation and growth concerns.

Summary of Forecasts

Conclusion

The document outlines a cautiously optimistic outlook for Latin America in 2018, with most countries expected to see growth and inflation moderation. However, challenges such as high fiscal burdens, complex tax systems, and structural issues in the business environment persist. Elections and policy changes will play a significant role in shaping economic trajectories, particularly in Brazil, Mexico, and Colombia.