Entries for 'Latin America'
August 11, 2022
Higher inflation in Chile reflects multiple factors. Demand pressure has eased but remains high. Currency depreciation has offset falling global commodity prices and extended the tightening cycle. Inflation in 2022 is likely to remain above 10% y/y even with a more favorable sequential path in H2.
August 1, 2022
The Colombian peso has seen a plunge this year amid global and local factors. External and fiscal imbalances remain wide despite a windfall from commodity exports. Uncertain policy plans of the incoming administration have exacerbated FX pressure.
July 1, 2022
Schedule for the IIF's 2022 virtual investor trips released.
June 28, 2022
Growth is stalling as policy stimulus is reversed and global headwinds mount. Despite high copper prices, the current account deficit remains wide. Business and popular sentiment has sagged, and the administration faces steep challenges amid legislative deadlock and a politically tough tax reform.
June 21, 2022
Spiking commodity prices will dampen momentum in Frontier LatAm. We have lowered our 2022 growth projection amid the war in Ukraine. Recovery in tourism and still-high remittances would partly mitigate the drag. Higher oil prices and slowing external demand could worsen fiscal and external pressure.
April 5, 2022
Chile and Colombia ran very wide twin deficits last year, …
and their economies overheated due to policy stimulus.
Very different fiscal policy wi...
March 24, 2022
Surging commodity prices due to war should support activity this year. However, net energy importers could suffer, and forceful monetary policy tightening to rein in inflation will likely weigh on growth in most economies. The medium-term outlook remains bleak across major LatAm countries.
March 18, 2022
Frontier LatAm countries stand to lose from the spillovers of the war in Ukraine. Fuel is a key driver of import demand in most countries; we estimate a $10 rise in oil prices yields negative trade effects in the range of 0.4% to 1.0% of GDP. El Salvador, Honduras, and Jamaica look most exposed.
March 9, 2022
Commodity export dependence across LatAm is high for EM. The commodity price surge due to war in Ukraine should bolster external accounts in several countries, as reliance on Europe as an export market has fallen. The hard currency windfall should help offset adverse effects on inflation and growth.
February 24, 2022
Rising inflation has forced major LatAm central banks to hike forcefully. A bottom-up analysis of inflation shows that the inflation surge has been broad-based across CPI baskets, suggesting demand-pull factors. Sustained inflation momentum in Mexico is tough to reconcile with the weak recovery.
January 19, 2022
Foreign reserves continued to recover in 2021, supported by factors including SDR allocation, high commodity prices, and exchange rate adjustment. Brazil, Mexico, Chile, and Peru beefed up external buffers. Yet challenging current account and capital flows dynamics could pressure reserves in 2022.
December 21, 2021
Chile's current account deficit is wide despite high copper prices.
December 16, 2021
The economy is stabilizing, with fiscal adjustment in line with IMF program targets. Rapid vaccination rollout and subsequent reopening have contributed to ongoing recovery, and EMBIG spreads have dropped sharply. Tough political negotiations are key to move forward with the ambitious reform agenda.
November 19, 2021
Inflation is rising due to higher food and energy prices, deglobalization, and supply chain disruptions. In addition, the recent increases in global CPI stem from widespread monetary easing and expansionary fiscal policy. Inflation may exceed central bank targets through 2022 and into 2023.
November 3, 2021
The possibility of a fourth pension fund withdrawal has fueled market concerns. The first three withdrawals have buoyed consumption, adding to inflationary pressure, and exacerbated financial stability challenges. A fourth withdrawal would undermine private investment, weighing on growth prospects.
November 1, 2021
The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.
October 26, 2021
El Salvador’s risk premium has skyrocketed amid financing shortfalls and governance issues. A vigorous growth rebound has aided the fiscal balance, but the 2022 proposed budget projects optimistically large gains in tax administration. Financing options are narrowing as IMF negotiations drag on.
October 20, 2021
We project moderate current account deficits despite strong imports. Nonresident capital flows will rebound this year, particularly in Brazil and Chile, and foreign reserves will improve supported by IMF SDR allocation. We see capital flows gradually slowing amid tighter global liquidity conditions.
October 8, 2021
Activity has rebounded faster than expected, spurred by exports and remittances.
Vaccination rollout has accelerated in several countries, aiding th...
September 29, 2021
In this note, we update out view on inflation and monetary policy in emerging markets. Rising inflation, even if partially transitory, has forced the hand of EM central banks. We expect inflationary pressures in many countries to peak in the next six months. Slowing growth, favorable base effects, and lower commodity prices will be the drivers. However, rate hikes were also prompted by expansionary fiscal policy in some cases. Furthermore, tightening global liquidity in 2022 may add pressure on central banks.