20171115-法国巴黎银行-Latin_America_Week_Ahead_11页_251kb

Latin America Weekly Market Summary - 13 - 18 November 2017

Core Content Overview

This report provides a summary of key economic and political events in Latin America for the week of 13–18 November 2017. It highlights the outlook for Brazil, Mexico, Colombia, Chile, and Argentina, with a focus on inflation, monetary policy, GDP growth, and upcoming elections.

Key Events and Highlights

Brazil

• Economic Highlights:
  • Retail sales are expected to show a slight monthly increase (+0.5% m/m) for September, with annual growth potentially reaching 5.4% y/y.
  • Positive retail sales and social security reform are set to be major topics.
• Political Highlights:
  • Social security reform is back on the negotiation table, with the government needing to approve it before the year ends.
• Monetary Policy:
  • The central bank is expected to maintain the current policy rate due to the recent CPI data showing no signs of deflation.
• Data Releases:
  • Monday, 13/11: Trade balance weekly, ANTAD same-store sales y/y (October), and retail sales y/y (September).
  • Wednesday, 15/11: GDP y/y (Q3), GDP q/q (Q3), and economic activity index y/y (September).
  • Thursday, 16/11: FGV inflation IGP-10 m/m (November).
  • During the Week: Tax collections and formal job creation data for October.

Mexico

• Economic Highlights:
  • The fifth round of NAFTA negotiations is set to begin, with controversial issues still unresolved.
  • A quiet week for economic data, but market attention will shift to the NAFTA talks, which could cause volatility.
• Political Highlights:
  • The last days of Mr. Agustin Carstens as Banxico's chief, with potential names for his replacement being discussed.
  • The replacement decision is under the authority of the president and will require Senate ratification.
• Monetary Policy:
  • The central bank will monitor international reserves, but no immediate rate changes are expected.
• Data Releases:
  • Monday, 13/11: ANTAD same-store sales y/y (October) and retail sales y/y (September).
  • Friday, 17/11: FIPE CPI - m/m (2nd preview November) and IBGE services sector volume y/y (September).
  • During the Week: Tax collections and formal job creation data for October.

Colombia

• Economic Highlights:
  • Q3 GDP growth is expected to accelerate to 2.0% y/y, with retail sales forecast to grow by 1.1% y/y in September.
  • The economy is expected to recover from its low point in H1 2017, driven by public investments, oil output, and agriculture.
  • Industrial production is expected to remain negative (-0.5% y/y), due to base effects and weak orders.
• Political Highlights:
  • No major political events are highlighted, but the economic recovery is seen as a key factor in growth.
• Data Releases:
  • Tuesday, 14/11: Industrial production y/y (September) and retail sales y/y (September).
  • Wednesday, 15/11: GDP y/y (Q3), GDP q/q (Q3), and economic activity index y/y (September).

Chile

• Economic Highlights:
  • CPI data for October surprised to the upside, reinforcing the view that the central bank will keep the policy rate unchanged for the remainder of 2017.
  • The improving growth picture is expected to lead to higher non-tradable price pressures.
• Monetary Policy:
  • The central bank (BCCh) is expected to remain on hold until Q2 2018, with potential rate hikes in the future.
• Data Releases:
  • Tuesday, 14/11: Overnight target rate, industrial production y/y (September), and retail sales y/y (September).

Argentina

• Economic Highlights:
  • October CPI is expected to be 1.5% m/m, a slight moderation, but still above BCRA's comfort level.
  • Inflation is forecast to moderate in 2018, with a revised 2017 CPI forecast at 22.5% Dec/Dec.
  • The 2018 inflation forecast has been increased to 13% (from 12%) due to the stickiness of core prices.
• Monetary Policy:
  • BCRA has raised the policy rate by 100 basis points to 28.75%, but is expected to keep it unchanged until Q2 2018.
• Data Releases:
  • Tuesday, 14/11: National CPI m/m (October), Greater Buenos Aires CPI y/y (October), and Greater Buenos Aires CPI m/m (October).

Main Views and Outlooks

• Brazil:
  • The economy is on a recovery path, with retail sales showing strong growth and social security reform expected to be a key political focus.
  • The government has a short window to approve the reform before the year ends.
• Mexico:
  • NAFTA negotiations are expected to be challenging, with unresolved controversial issues.
  • The replacement of Banxico's governor is under discussion, with potential candidates including current board members and external figures.
• Colombia:
  • Economic activity is expected to rebound, with Q3 GDP likely to show growth of 2.0% y/y.
  • Public sector demand and oil production are seen as key growth drivers, while private consumption remains weak.
• Chile:
  • The central bank is expected to keep the policy rate unchanged for the remainder of 2017.
  • CPI data has eased deflation concerns, and the central bank is likely to consider tightening policy in 2018.
• Argentina:
  • Inflation remains high, but is expected to moderate in 2018.
  • BCRA will likely maintain its current policy stance until Q2 2018.

Key Data Releases and Forecasts

Conclusion

The week ahead will be marked by a mix of economic data and political developments across Latin America. Brazil and Mexico will dominate the economic agenda, with Brazil's retail sales and social security reform, and Mexico's NAFTA negotiations and leadership transition, being key focal points. Colombia is expected to show signs of economic recovery, while Chile and Argentina will continue to monitor inflation and monetary policy. Overall, the market outlook is cautiously optimistic, with a focus on gradual economic improvement and policy stability.