On June 24th, the IIF, in partnership with IDB Lab and Ita , convened leaders from leading institutions from the financial, technology, and public sectors in LATAM to explore the transformative world of tokenization. This document outlines key points from the session.

Brazil s trade surplus has been building steadily in recent years. The decomposition of trade flows shows agricultural export volume as the catalyst. We estimate the trend trade surplus at 2.2% of GDP, up from 1% a decade ago, given productivity and arable land potential driving agricultural growth.

Initial policy measures suggest a less market-friendly stance than expected by investors. Top concerns are potential meddling in monetary policy, high spending, and subsidized lending. Despite increased state intervention, we believe moderation will prevail, helping avoid more adverse scenarios.

We have increased our 2022 LatAm growth forecast to 3.1% amid a robust H1, despite recent drag from softer commodity prices and forceful monetary tightening. While policy adjustment and global headwinds will weaken activity in 2023, the external environment could encourage LatAm asset allocation.

Investors are pricing in more checks and balances post-election. The new political landscape could make the macroeconomic policy framework more resilient. Despite rising transition risk, we do not expect a full-blown crisis. We remain optimistic as incentives for moderate policies have increased.

The upcoming presidential election has become more contested. Yet despite rising transition risk, we do not expect full-blown institutional crisis, and a relatively smooth transfer of power could lift investor confidence. Regardless of who wins, the overall economic framework should stay unchanged.

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.

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.

LatAm central banks have accelerated monetary policy normalization. We expect Brazil and Andean countries to hike faster than market expectations, with Mexico remaining more dovish amid a negative output gap. Risks are tilted up due to potentially worsening global conditions and higher fiscal risk.

LatAm countries have been forced to partially extend fiscal policy support this year amid increased social demands. Maintaining some stimulus while sustaining investor confidence has proven challenging. Fragile public finances could result in undue pressure on monetary policy, weighing on growth.

Base metal prices have far exceeded our initial forecasts, supported by low inventory. We expect average base metal prices to be 44% higher in 2021 and decline by 5% in 2022 as some supply constraints ease.

Inflation has picked up amid high commodity prices, supply disruptions, and uneven growth recovery. Scope to postpone monetary policy normalization has rapidly narrowed, and we see most countries hiking this year. Persistent fiscal fragility could complicate orderly unwinding of monetary stimulus.

We use VAR models to decompose the effect of commodities and FX on EM inflation. Turkey and Russia, for different reasons, appear most exposed to exchange rate shocks. Headline inflation in South Africa and Brazil appear to be driven by energy prices, while price dynamics in Indonesia are more responsive to non-energy commodities. We expect tight stances in Brazil, Mexico, Russia, Turkey to keep expectations anchored.

COVID-19 has exacerbated regional labor market vulnerability, and lockdowns have worsened the deterioration in employment conditions. Uneven losses across formal and informal sectors suggest declining job quality. Slow post-lockdown job growth raises fears of a jobless recovery in some countries.

We project a real GDP contraction of 7.5% in 2020 and a modest rebound in 2021. Tourism remains depressed, but remittances have surpassed pre-COVID-19 levels. SLV, JAM, and PAN are set to endure the steepest recessions, while GTM should contract the least due to its stable macroeconomic framework.

Exchange rate flexibility has eased the adjustment to COVID-19 in most large countries. However, "fear of floating" is still high across Central America and the Caribbean. While local market financing is increasing, countries have largely had to borrow in hard currency to help withstand the shock.

COVID-19 has widened fiscal deficits and spurred needs for additional funding. As a result, QE-type measures have gained impetus amid disinflationary pressure. While countries with sounder institutions can take more aggressive steps, we expect QE to remain modest barring a resurgence of instability.

COVID-19 has increased external funding challenges despite moderate borrowing needs. Notwithstanding oil price relief, collapsing remittances and tourism will weigh on current account receipts. While some countries have tapped global debt markets, uncertainty over financing sources remains.

COVID-19 has affected Latin America through multiple channels. Pre-existing challenges and increased exposure put the region in a difficult position. We project a deep recession this year amid a sudden stop in capital flows and limited policy space.

South Africa and Mexico face significant fiscal risks from struggling SOEs. Both Eskom and Pemex are receiving sizable support from governments. Such risks prompt SARB and BANXICO to keep real rates above EM peers. A downgrade of sovereign credit ratings could lead to large portfolio outflows. However, risks to debt sustainability are higher in South Africa than Mexico.

Current account deficits in Frontier LatAm are wide by EM standards, largely due to energy trade imbalances, but lower oil prices since 2014 have helped ease financing gaps. Despite global headwinds and regional tensions, we project CA deficits to stay contained in 2019-20, broadly financed by FDI.

Pension reform has improved Brazil’s growth prospects amid an anemic recovery.

We assess the impact of potential policy surprises, using our BoP Nowcast and positioning toolkits. Low current account deficits pose limited risk, but in Mexico heavier positioning than in Brazil could amplify the impact of negative policy surprises.

In this edition of Sticky Notes, we look at takeaways from the U.S. mid-term elections, the latest U.S.-China trade talks, Brazil in the wake of a newly elected government, and U.S. soybean exports.

If you would like to receive the Sticky Notes email, please send us an email' here ' with your information. This week: Kristen Silverberg looks at r.

Slack in Brazil remains high two years after the 2015-16 recession. Can the economy bounce back under the new administration? EM growth is persistentl.

If you would like to receive the Sticky Notes email, please send us an email' here ' with your information. This week: Kristen Silverberg looks at t.

Brazil approaches elections in a complex market situation, " and suffering from long-standing fiscal vulnerabilities. We analyze the electoral outloo.

Welcome to Sticky Notes, the IIF's new weekly look at the big events we're watching in international economics and politics. If you would like to rece.

Recent years have seen profound political turmoil weigh on activity. The stage is now set for a rebound in activity; we forecast solid growth this yea.

An ingrained decline in core inflation?' Core inflation fell to its lowest level since 2007, driven by items related to the food & beverage and trans.

Inflation fell to its lowest level since 1999 driven by lower food, dwellings, and transport contributions. Using a bottom-up approach, we found incre.

Despite political woes, the reform drive regained force, improving macro prospects amid global tailwinds A sizable fiscal deficit remains the major ma.

Weak business confidence has been a critical transmission channel' We quantify the impact of dwindling confidence.

Following a strong 2017Q1, our monthly growth tracker suggests a deceleration in the short-term Political woes have eroded growth expectations, reflec.

The approval of labor market reforms in Congress and the corruption conviction of former President Lula da Silva have given a lift to Brazilian asset.

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A new wave of turmoil stemming from the ongoing corruption probe clouds the growth outlook. Political instability has been a key factor behind the slo.

" Markets-uncertainty bites " Brazil-heightened political uncertainty " Mexico-putting the pieces together " Global corporates-more capex in sight.

Stability in oil prices to be challenged in coming months OPEC seems to have adhered to production cut" " but US shale producers are ramping up prod.

Despite a delayed recovery, we come back cautiously optimistic from our recent trip to Brazil. The ongoing policy course is setting the foundation for.

Markets reassess the Trump trade US-a surge in animal spirits China-no deleveraging in 2016 Brazil-monetary easing accelerates Turkey-tightening liqui.

We come back cautiously optimistic from our recent trip to Brazil. Policy effectiveness has increased and appetite for populist fixes has diminished.

Federal Reserve-inching closer to that rate hike after Jackson Hole Brazil-Dilma no more Nigeria-officially in recession EM portfolio flows remain st.

NO MARGIN FOR ERROR Below are the main takeaways from our meetings last week in Brazil with the Finance Minister, Central Bank Governor, high-level p.

Key provisions to reduce fiscal rigidity and limit spending are being endorsed. The policy adjustment, however, is beset by political r.

Since our February report, reassuring policy signals from China, the Fed and the ECB have helped to reduce concerns about tail risks, prompting a retu.

Fresh impetus in the search for yield U.S. monetary policy-recent data likely to reinforce Fed patience China-more stable China capital flows-for now.

1. What next for the rally? ' After the solid run-up since mid-February, the tone in global equity markets has been more sober over the past week. The.

Impeachment moves forward.' On April 17, the Lower House of Congress voted to impeach President Dilma Rousseff on the grounds that her government used.

Yellen cheers the markets-but for how long? March Madness - EM portfolio flows surge to 21-month high Brazil-abandoning a sinking ship GCC authorities.

Our recent trip to Brazil found a country in the midst of a rapidly escalating political and economic crisis. " Uncertainty is the only certainty. I.

The Petrobras.

2015 is shaping up as the year of divergence: mature economy growth accelerates while EMs lag behind; the Fed is set to hike rates while most other ce.

Stimulus in Europe-all hopes still on monetary policy Manufacturing PMIs- uneven ride Brazil goes orthodox South Africa-hoping for better times.

The global economy seemed to be losing traction until recently, but the latest data paint a brighter picture: business sentiment picked up in October,.

Brazil is entering its fourth consecutive year of below-trend economic growth. Tightening global financing conditions find the country with a strong e.

Policy has responded aggressively to currency pressures to stem depreciation of the real and contain inflation. Monetary policy has been further tight.

Confidence has weakened under the weight of sluggish growth, increased political uncertainty and policy inconsistency. Confidence erosion augurs that.

Social protests have coincided with higher U.S. Treasury yields, increasing pressure on policymaking already struggling to revive growth and rein in i.

A low ratio of investment to GDP is weighing on trend growth. Despite lower interest rates, investors remain in a cautious, wait-and-see mode amid hei.