20171218-法国巴黎银行-Latin_America_Week_Ahead_11页_307kb

Latin America Weekly Market Economics Summary - 18 - 22 December 2017

Core Content Overview

This summary outlines key economic events and trends across Latin America for the week of 18-22 December 2017, focusing on inflation, fiscal policy, political developments, and market conditions.

Key Events and Economic Outlook

Brazil

• Social Security Reform Bill: Voting on the bill was postponed to February 2018. Approval requires 308 votes in Congress, which may be challenging to achieve.
• Current Account Deficit: Expected to show a small deficit of USD 1.6bn for November, with FDI net inflow up by USD 4.5bn.
• Inflation Report: The Q4 inflation report is due on Thursday. Inflation is expected to remain slightly above target, with annual inflation rising to 2.93% in November.
• Credit Report: Expected to show continued household deleveraging, supported by monetary policy easing.
• Consumer Confidence: FGV consumer confidence index for December is forecast at 86.8.
• Formal Job Creation: Expected to be around 76,599 in November.

Mexico

• CPI and Inflation: CPI is expected to edge down to 6.4% y/y, with a mid-month CPI drop of 25bp to 6.43%.
• Retail Sales: Contracted by 1.5% y/y in October, likely to remain weak.
• Central Bank Policy: Banxico raised rates by 25bp in December, but further hikes are unlikely. The easing cycle is expected to begin in H2 2018.
• Election Impact: The 1 July presidential election could influence monetary policy, especially if the winner supports market-friendly policies.
• Minimum Wage Decision: Expected to be announced, with employers seeking around 4% and unions around 10%.
• Political Developments: Frente Ciudadano is choosing its candidate, while AMLO has announced potential cabinet picks.

Colombia

• Trade Balance: Expected to improve slightly, aided by oil prices. The trade balance for October is due on Monday.
• Economic Activity: Forecast to improve to 0.7% y/y in October, up from 0.2% in September.
• Consumer Confidence: Confidence numbers are expected to remain near lows, with a potential gradual recovery.
• Fiscal Outlook: The government's nominal deficit target for 2018 is difficult to achieve, with increased spending provisions.
• Minimum Wage: A decision on the 2018 minimum wage is expected, with the central bank urging consideration of inflation expectations.

Chile

• Presidential Election: The second-round vote is expected to be tight, with potential low voter participation.
• Central Bank Policy: BCCh left the policy rate unchanged at 2.5%, with concerns over low inflation. Rate normalisation is likely in 2018.
• Economic Activity: Industrial production is expected to grow by 5.0% y/y in November.
• Fiscal Outlook: Public expenditure and activity of publicly owned banks are expected to contract.

Argentina

• Social Security Bill: The bill could be voted next week, with support from provincial governors.
• GDP Growth: Real GDP growth is expected to accelerate to 4.5% y/y in Q3 2017, up from 3.2% in the previous quarter.
• Current Account Deficit: Expected to widen to 4.3% of GDP in Q3, with a forecast of 4.4% for the full year.
• Consumer Confidence: The December consumer confidence index is expected to be 51.1.
• Fiscal Deficit: The November fiscal report is expected to show a modest primary deficit, with the annual primary deficit at 4.2% of GDP.

Main Themes and Trends

• Inflation Management: Central banks in Brazil, Mexico, and Argentina are closely monitoring inflation, with expectations of gradual easing in 2018.
• Political Influence: Political developments, including elections and legislative proposals, are shaping fiscal and monetary policy directions.
• Economic Recovery: Signs of economic recovery are emerging, but growth remains sluggish, with continued challenges in domestic consumption and trade balances.
• Fiscal Challenges: Budgetary constraints and spending provisions are expected to impact fiscal policy in several countries, particularly Mexico and Colombia.
• Monetary Policy Outlook: A shift towards monetary easing is anticipated in H2 2018, especially in Mexico, with the central bank aiming to bring rates into neutral territory.

Key Data Releases

Summary of Key Figures

• Brazil: Current account deficit of USD 1.6bn, FDI up by USD 4.5bn, Selic rate expected to drop to 6.5% in 2018.
• Mexico: CPI expected to drop to 6.43%, retail sales contracting by 1.5% y/y, Banxico may ease policy in H2 2018.
• Colombia: Trade balance expected to improve slightly, economic activity forecast at 0.7% y/y, confidence near lows.
• Chile: Tight presidential election, BCCh rate unchanged at 2.5%, rate normalisation expected in 2018.
• Argentina: Real GDP growth at 4.5% y/y in Q3, current account deficit at 4.3% of GDP, primary fiscal deficit at 4.2% of GDP.

Conclusion

The week ahead will be marked by key economic data releases and political developments across Latin America. Inflation remains a central concern, with central banks preparing for potential easing cycles in 2018. Political outcomes, especially in Mexico and Chile, could significantly influence policy directions, while fiscal challenges persist in several countries. Economic activity shows signs of improvement, but growth remains constrained by domestic consumption and trade dynamics.