20171023-法国巴黎银行-Latin_America_Week_Ahead_9页_241kb

Summary of Latin America Weekly Market Economics - 23-29 October 2017

Core Content

This document provides a comprehensive overview of key economic events and central bank policy expectations for Latin America in the week of 23-29 October 2017. It includes forecasts for inflation, GDP growth, trade balances, and monetary policy decisions across Brazil, Mexico, Colombia, Chile, and Argentina. The analysis also highlights the potential implications of these data points on market conditions and economic outlooks.

Key Events and Forecasts

Brazil

• Central Bank Policy: The Selic rate is expected to be cut by 75 basis points (bps) to 7.50% this week. The central bank is likely to continue easing monetary policy, with further cuts projected for December (50 bps) and February/March (25 bps each), aiming for a terminal rate of 6.50% by March 2018.
• Political Developments: Congress is set to examine the prosecutor's request to investigate President Temer, with a likely rejection.
• Economic Indicators:
  • Current Account: Expected to show a small surplus of USD 0.2bn in September.
  • FDI Inflows: Forecast to reach USD 5.8bn in September, keeping the 12-month total at USD 83 billion.
  • Credit Report: Indicates continued household deleveraging, with credit conditions still tight.
  • Formal Employment: Expected to report 35,457 new formal jobs in September.

Mexico

• CPI Data: The biweekly CPI is forecast to accelerate to 0.59% month-on-month (m/m) and 6.27% year-on-year (y/y), driven by energy prices and international gasoline costs.
• Core CPI: Expected to ease further, reaching 0.17% m/m and 4.67% y/y by the end of the year.
• Economic Activity:
  • GDP Proxy: Likely to rise to 1.5% y/y in August, up from 1.0% in July.
  • Retail Sales: Expected to grow only 0.3% y/y, reflecting weak consumer demand.
  • Trade Balance: Likely to show a deficit of USD 2.7bn in September, indicating continued reliance on imports.

Colombia

• Monetary Policy: BanRep is expected to keep the policy rate on hold, but there is a risk of a 25 bps cut in the coming weeks due to inflation and weak economic data.
• Economic Activity:
  • Industrial Confidence: Likely to remain unchanged or decline slightly.
  • Retail Confidence: Expected to show a modest improvement, but not a significant rebound.
  • Confidence Numbers: Overall, confidence is unlikely to rebound much due to slow economic recovery and high unemployment.

Chile

• Economic Outlook: A quiet week with no major data releases, but the central bank is expected to maintain a cautious stance.
• Inflation: Core inflation remains 1pp above the tolerance range, suggesting a wait-and-see approach until late 2017.

Argentina

• Trade Balance: Likely to show a USD 1.0bn deficit in September, with the 12-month total widening to USD 5.4 billion.
• Economic Activity:
  • Real GDP Proxy: Expected to show a 0.5% m/m increase in August, but a temporary slowdown to 3.6% y/y due to base effects.
  • Consumer Confidence: Likely to improve, with the October index expected to rise to 51.04.
  • Fiscal Deficit: Projected to decline to 3.7% of GDP in September, staying on target for the year.

Key Insights

• Inflation Trends: Inflation is expected to remain relatively stable in Brazil and Mexico, with core CPI showing signs of easing.
• Monetary Policy Outlook: Central banks in Brazil and Argentina are likely to continue easing monetary policy, while Colombia remains on hold with cautious signals.
• Economic Recovery: Most economies in the region are experiencing slow or moderate recovery, with continued challenges in consumer demand and industrial activity.
• Trade and Investment: Trade balances remain in deficit for Brazil and Argentina, while FDI inflows are robust in Brazil, indicating continued foreign interest.

Economic Calendar Highlights

Conclusion

The week ahead in Latin America is marked by a mix of monetary policy decisions and economic data releases. Brazil and Argentina are expected to continue with easing monetary policies, while Mexico and Colombia show cautious approaches. Inflation is projected to remain under control in most countries, and economic activity is showing signs of gradual improvement, albeit with weak consumer and retail sectors. The document underscores the importance of monitoring these indicators for future economic and market trends.