Brazil: Wage Inflation Will Likely Not Be a Big Deal

April 24, 2024 3:19 PM UTC

Our analysis delves into recent trends in the Brazilian labor market, focusing on CPI and wage inflation. Utilizing a model akin to Ghomi et al. (2024) and Blanchard and Bernanke (2023), we dissect recent spikes in wage inflation and CPI growth. Notably, our findings suggest that recent wage spikes

Indonesia: MPC Preview: Bank Indonesia to Hold Rate Despite Currency Volatility

April 23, 2024 11:12 AM UTC

With inflation within target range and the need to defend the currency amid global uncertainties and US dollar strength, Bank Indonesia (BI) is likely to extend its pause on rate adjustments in the upcoming monetary policy meeting on April 24. BI remains committed to stabilising the Indonesian rupia

Mexico Elections: Sheimbaum Victory will likely mean a continuity of Current Government

April 19, 2024 9:23 PM UTC

On June 2, Mexico will see historic general elections, marking the potential for its first female President. Claudia Sheinbaum of Morena and Xóchitl Galvés of PAN-PRI lead the race. Sheinbaum aims to continue Lopez-Obrador's legacy, while Galvés emphasizes social mobility. The polls show Sheimbau

Brazil: Revision of Targets Shows the Weakness of the New Fiscal Framework

April 18, 2024 1:39 PM UTC

The Brazilian government has revised its budget targets for 2025 and 2026, lowering the deficit to 0% and a 0.25% surplus in 2025 and 2026 respectively, from 0.5% surplus in 2025 and 1% in 2026. However, reliance on revenue increases poses challenges amid resistance from Congress. Despite reduced ta

Argentina CPI Review: Small Improvements Amid the Uncertainty

April 14, 2024 1:26 PM UTC

The INDEC's March CPI data reveals an 11.0% increase, down from February's 13.2%. Annually, Argentine CPI rose by 287% (Y/Y), with core CPI below 10%. Despite past shocks, we foresee continued monthly CPI slowdown. Argentina focuses on fiscal measures and on stabilize the exchange rate to accumulate

Mexico CPI Review: Slightly Below Expectations, with Concerns in Service

April 9, 2024 6:43 PM UTC

Mexico's March CPI data, released by the National Statistics Institute, shows a slight increase of 0.29%, below the 0.36% expectation. Year-on-year CPI remains stable at 4.4%, above Banxico's 3.0% target. While fruit and vegetable prices dropped, transport costs rose. Concerns arise with Services CP

Mexico CPI Preview: Well Behaved March

April 8, 2024 1:10 PM UTC

On April 9th, Mexico's National Institute for Statistics will release March's CPI data. Forecast suggests a 0.4% rise, keeping YoY CPI stable at 4.5%, mainly due to base effects. Core CPI likely to remain steady at 4.5%, showing progress in disinflation despite non-alignment with Banxico's 3.0% targ

Banxico Minutes: Hawkish Cut and Different Views

April 5, 2024 2:18 PM UTC

Banxico's recent meeting minutes reveal a split among board members regarding monetary policy, with a 25bps rate cut to 11.0%. Despite progress in curbing inflation, differing views on policy direction persist. Inflation expectations deviate from targets, with potential risks in fiscal policy and wa

Brazil: What About the Fiscal?

April 3, 2024 2:31 PM UTC

In 2023, Brazil witnessed a significant fiscal decline, with the GDP surplus of 0.5% in 2022 turning into a 2.1% deficit, surpassing the targeted 0.5% deficit set by the new fiscal rule. Despite measures aimed at reinstating fiscal sustainability, immediate adjustments are unlikely. The deterioratio

Indonesia CPI Review: Ramadan Demand Drives Up Inflation

April 1, 2024 1:33 PM UTC

Indonesia's latest Consumer Price Index (CPI) data has revealed a notable acceleration in inflation, surpassing expectations and marking the highest rate since August 2023. The surge, driven primarily by heightened demand during the fasting month of Ramadan, highlights significant price pressures ac

LatAm Outlook: Getting Deeper in the Cutting Cycle

March 22, 2024 7:04 PM UTC

·       Brazil and Mexico growth will decelerate from the growth rates seen in 2023. The stronger basis of comparisons in 2023 and the tight monetary policy will diminish growth during 2024. Brazil robust agricultural growth will not repeat in 2024, while Mexico growth is restrained by a tigh

Bank Indonesia to Retain Policy Rate

March 18, 2024 5:40 AM UTC

Bank Indonesia (BI) will likely maintain the key 7-day reverse repo rate unchanged in March at 6%, in line with recent trends. The stability of the rupiah remains a crucial consideration for BI, alongside CPI inflation, which has moderated within the new target band of 2.5+/-1%. 

Argentina CPI Review: Inflation Eases in February to 13%, but it Still a Long Road

March 13, 2024 8:09 PM UTC

The February CPI release by Argentina's INDEC shows a slight ease in inflation to 13.8% (m/m), yet on an annual basis, it has soared to 276%, hitting a record high since the 1980s. Major increases were noted in Transport (21%), Food and Beverages (11%), and Housing (20%). While indicating initial im

Brazil CPI Preview: 0.7% in February will likely be only a Transitory Problem

March 8, 2024 8:56 PM UTC

IBGE will release February's CPI data on Mar. 12, forecasting a 0.7% increase, driven mainly by education and food sectors. While some rises may persist, they're not indicative of a general price surge. Despite a 0.7% rise, Y/Y CPI is expected to drop to 4.4%, aligning with BCB targets. Forecasts su

Mexico CPI Review: CPI Grew 0.1% in February

March 7, 2024 10:16 PM UTC

The February CPI figures released by Mexico's National Institute of Statistics and Geography show a slight 0.1% increase, aligning with expectations. Year-on-year CPI dropped to 4.4%, ending a three-month rise. Food and Beverages notably fell by 1.3%, while Housing and Transports saw positive growth

Mexico CPI Preview: Easing Inflation to Back March Cut

March 4, 2024 1:21 PM UTC

INEGI will release February's CPI data, with an expected growth of only 0.1%. Despite this, the Y/Y index is forecasted to fall to 4.4% from January's 4.8%. Notably, Non-Core food CPI contracted by 3.9% in February, showing a reversal from January's rise. We anticipate a 0.3% increase in Core CPI, a

Indonesia Preview: CPI to remain broadly stable

February 28, 2024 3:29 PM UTC

Indonesia’s February inflation is likely to remain broadly stable. Food prices will maintain upward pressures but a tight monetary stance will keep headline inflation in check. Increased demand ahead of Ramadan could see prices spike in March. 

Bank Indonesia indicates H2 easing

February 22, 2024 11:07 AM UTC

In a bid to support the stability of the Indonesian economy and the rupiah, Bank Indonesia (BI) has opted to keep its benchmark interest rate unchanged at 6% in its latest monetary policy committee decision today (February 21). This decision aligns with BI's commitment to balance economic growth whi

Argentina: CPI grows 20.6% in January

February 15, 2024 1:26 PM UTC

Argentina's CPI surged in January, marking a 20.6% increase (m/m), the highest globally. Annual figures show a staggering 254% rise. The rise was influenced by the exchange rate devaluation and the release of controlled prices. Only in April we will probably see a CPI cleaned from this noises. The g

Brazil: Bolsonaro Closer to Facing Jail Time

February 13, 2024 1:02 PM UTC

The Brazilian Supreme Court's action against Bolsonaro's inner circle, accusing them of undermining the rule of law and plotting against electronic voting, signals a potential turning point. Bolsonaro's popularity, despite legal challenges, underscores Brazil's divided political landscape. The upcom

Mexico CPI Review: Unpleasant but It might be Transitory

February 8, 2024 6:33 PM UTC

The CPI release for January by INEGI aligns with expectations, showing a 0.9% rise (m/m). This brings the Y/Y CPI to 4.9%, marking a third consecutive month of increase. Concerns may arise, but much of the rise stems from non-core items, possibly indicating transitory inflation. Banxico's strategy f

Argentina: Milei’s First set of Laws Rejected in the Chamber of Deputies

February 7, 2024 12:53 PM UTC

JJavier Milei's ambitious deregulation laws for the Argentine economy faced rejection in the Chamber of Deputies, signaling challenges in negotiating with the current Congress. Milei's government must now revise its strategy, possibly focusing on less contentious issues. Despite setbacks, the govern

Mexico GDP Review: Marginal Growth Points to Deceleration but the Outlook is still Bright

January 30, 2024 5:34 PM UTC

The Mexican Economy experienced a slight Q4 deceleration, growing 0.1%, with Agriculture leading at 1.1%. Services were stagnant at 0%, but annual growth was positive, reaching 3.1% in 2023. The industrial sector propelled growth by 3.6%, aligning with nearshoring trends. Despite potential economic

Mexico: Lopez-Obrador Last Dance as President

January 26, 2024 8:14 PM UTC

Andres Manuel Lopez-Obrador's presidency faced economic challenges, with limited pandemic support, but maintained fiscal prudence. Despite attempts to expand state presence, fiscal discipline paved the way for nearshoring. As his term concludes, Lopez-Obrador aims to secure seats for his party, MORE

Mexico: FDI Increases 21% in 2023

January 25, 2024 8:58 PM UTC

UNCTAD's preliminary estimates show a 9% decline in global Foreign Direct Investments to developing countries in 2023, contrasting with Mexico's exceptional 21% increase, likely due to nearshoring. Greenfield projects and expansion in the Mexico Industrial Park signal growth. While 2023's overall FD

Argentina: Road to stabilization will be bumpy

January 24, 2024 9:38 PM UTC

Javier Milei's administration, despite securing an IMF deal, faces hurdles in stabilizing Argentina. Targeting a $10 billion increase in net reserves, equivalent to a quarter of the country's gross reserves, may prove overly ambitious. Contentious laws in Congress lack consensus, sparking opposition

Mexico CPI Review: Slight Uptick in December

January 9, 2024 3:00 PM UTC

Figure 1: Mexico CPI by Groups (%, m/m)Source: INEGIThe National Institute of Statistics and Geography of Mexico (INEGI) has recently released the Consumer Price Index (CPI) data for December. The figures have exceeded expectations, surprising market participants. While a Citibamex survey anticipate

Bank Indonesia Navigating the Path to Sustained Growth

January 5, 2024 10:17 AM UTC

Delving into the components of CPI, the December easing is attributed to a multifaceted slowdown in both food and utility prices. Disinflationary pressures from household equipment, restaurants, and personal care items contributed to the overall dip. However, information and recreation prices exerte

EM FX Outlook: USD Decline v Inflation Differentials

December 19, 2023 9:59 AM UTC

·        In spot terms, we see the Indonesian Rupiah (IDR) and Malaysian Ringgit (MYR) rising against the USD as Fed rate cuts narrow interest rate differentials and a move away from an overvalued USD occurs.  Brazilian Real (BRL) and Mexican Peso (MXN) will likely be stable against the USD

Asia/Pacific (ex-China/Japan) Outlook: Going Big, Going Strong

December 18, 2023 10:05 AM UTC

Our Forecasts
Source: Continuum Economics
Risks to Our Views
Source: Continuum Economics
Regional Dynamics: Mixed Prospects in 2024  
In H1-2024, much like in 2023, the emerging economies in Asia will continue to outperform other emerging markets and display notable resilience in comparison to develope

LatAm Outlook: Diverging Paths in 2024

December 15, 2023 12:25 PM UTC

Our Forecasts
Risks to Our Views
Source: Continuum Economics
Brazil: Switching Back to Slow Growth?
Brazil growth has finally begun to decelerate (here), as the growth in the third quarter dropped to 0.1% (q/q). However, growth for 2023 is expected to stand at 3.2% (Yr/Yr) which is quite a bit higher th

Mexico CPI Review: 0.6% (m/m) in November but a Controlled Situation

December 7, 2023 4:39 PM UTC

Figure 1: Mexico CPI by Groups (%, m/m)
Source: INEGI
The Mexico National Statistics Institute (INEGI) has released inflation data for November, indicating a 0.6% (m/m) growth in the Consumer Price Index (CPI). The results fell slightly below market expectations, which had forecasted a 0.6% (m/m) incr

India's Robust Q2 FY24 Economic Growth Defies Global Challenges

December 1, 2023 12:04 PM UTC

Figure 1: India GDP and leading growth sectors (% y/y)
Source: MOSPI, Continuum Economics
A significant driver of this impressive growth was the remarkable increase of 10.9% y/y in capital formation and a substantial 12.4% y/y surge in government spending. This was primarily driven by the government's

Brazil: The 0% Deficit Tale is About to be Forgotten

November 29, 2023 7:47 PM UTC

When Finance Minister Fernando Haddad unveiled the New Fiscal Framework, capping expenditure growth at 70% of revenue growth, he anticipated a sustained increase in revenue in line with the rates observed in 2021 and 2022. The objective was to keep expenditures below revenues, ensuring fiscal adjust

LatAm: Long Term Growth Differences

November 24, 2023 11:52 AM UTC

We see different patterns of growth for the Latin American countries. Brazil, Mexico and Argentina have different types of constraints that will define their long-term growth.
Figure 1: Annual GDP Growth
Source: Continuum Economics. *forecasts
We observe that the long-term growth trajectory for Brazil

El niño impacts on Latin America: a headwind for Brazil

November 22, 2023 11:30 AM UTC

El Niño is a climate pattern that makes Pacific Ocean waters warmer and, consequently, triggers extreme weather conditions in Latin America (LatAm) economies. However, its impacts among the LatAm countries varies. In some regions, this climate phenomenon causes severe droughts, impacting agricultur

Argentina: Javier Milei wins the Election, Uncertainty Mounts

November 20, 2023 1:26 PM UTC

Argentinians have elected Javier Milei to lead the country for the next four years, defying expectations set by most polls. Despite a marginal advantage predicted for either candidate, Milei secured a comfortable victory over Sergio Massa, obtaining 55.7% of the votes, while Massa gathered only 44.3

Argentina Elections Run-off: An Open Race

November 16, 2023 5:44 PM UTC

Argentina is poised for a crucial electoral decision on November 19, determining the occupant of the Presidential seat on December 10. The contest features the far-right Libertarian candidate, Javier Milei, against Sergio Massa, representing the ruling Peronist coalition. Polls present a divided out

Argentina CPI Review: Prices Freeze led to a slowdown on inflation

November 14, 2023 5:17 PM UTC

Figure 1: Argentina CPI by Groups (m/m, %)
Source: INDEC
The Argentina National Statistics Institute (INDEC) has recently released the Consumer Price Index (CPI) data for October. According to the data, Argentina's CPI witnessed an 8.3% month-on-month increase. Despite the elevated inflation levels fo

Mexico CPI Review: Inflation Continues to Fall

November 9, 2023 5:10 PM UTC

Figure 1: Mexico’s CPI (%, Y/Y)
Source: INEGI
The Mexican National Institute of Statistics (INEGI) has just unveiled the latest Consumer Price Index (CPI) figures for October, reflecting a continued moderate increase with the CPI index rising by 0.4% (month-on-month). On an annual basis, inflation h

Charting our Views: October 2023

October 31, 2023 11:11 AM UTC

Download the PDF on the left to see our key economic and asset class views

Argentina: Third Place Bulrich Announce Milei’s Support

October 26, 2023 3:13 PM UTC

Patricia Bullrich, the presidential candidate for 'Juntos por el Cambio' and the third-place contender in the elections, has recently announced her personal endorsement of Javier Milei. Notably, this decision stands independently from the stance of the remaining factions within the coalition. 'Junto

Argentina Elections: Massa Surprises and Will Dispute a Tight Run-off with Milei

October 23, 2023 4:03 PM UTC

Figure 1: Votes for President (%)
Source: La Nacion
On October 22, Argentina held its elections, yielding surprising results. Sergio Massa secured 37% of the votes, marking a significant 9-percentage-point increase from the national primaries, where he had gathered 28% support. The far-right candidate