Mexico CPI Review: 0.2% Growth in April

May 9, 2024 6:11 PM UTC

April's CPI data, despite a 0.2% m/m growth, reveals a significant y/y uptick to 4.6% from March's 4.4%, challenging norms due to electricity tariff adjustments. Core CPI maintained stability with a 0.2% increase, while Core Goods CPI rose by 0.3% and Services CPI by 0.1%, accumulating a 5.2% y/y gr

Banxico Preview: Continuing at 25bps

May 7, 2024 12:43 PM UTC

Banxico will convene on May 9 to decide on the policy rate, having initiated a possible cutting cycle. Despite concerns, the MXN remains stable. The 25bps adjustment aims to maintain tight monetary policy while mitigating inflation. The board may split over this decision, but Banxico is likely to co

EMFX: Diverging On Domestic Forces Not Less Fed Easing Hopes

May 3, 2024 10:45 AM UTC

While U.S. economic developments, plus Fed policy prospects, will be important in terms of EM currency developments, domestic politics and fundamentals will also be decisive. These can keep the South Africa Rand volatile in the remainder of 2024, given the risk of a coalition government and African

Mexico GDP Review: 0.2% Growth but Still Subpar

April 30, 2024 5:54 PM UTC

INEGI released Mexico's Preliminary GDP for Q1 2024, showing 0.2% growth, slightly above expectations. Annual GDP slowed to 2.0% from 2.8% in Q4 2023. The economy is losing momentum due to tight monetary policy and weakened U.S. demand. Agriculture contracted by 1.1%, Industry by 0.4%, while Service

Mexico GDP Preview: Stagnation in the First Quarter

April 29, 2024 5:22 PM UTC

INEGI will release Mexico's Preliminary GDP data, indicating 0% growth in Q1, likely due to stagnation in key sectors like manufacturing and construction. The service sector, hit hard by the pandemic, also shows signs of sluggishness. While recovery is expected, sustained poor growth raises concerns

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

EM FX Outlook: Domestic Drivers Key

March 26, 2024 9:01 AM UTC

   In terms of spot EM FX projections domestic drivers remain critical, with a desire to avoid appreciation versus the USD for some countries.  Fed easing in H2 2024 should however help EMFX more broadly and allow some recovery in spot rates (e.g. Indonesian Rupiah (IDR), South African Rand (ZAR)

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

Banxico Review: 25bps Cut but not Unanimously

March 21, 2024 9:09 PM UTC

Banxico has cut the policy rate by 25bps to 11% from 11.25%. The board stressed the drop on core inflation although their balance of risks is biased to upside. Banxico has not given any forward-guidance stating the next decision will be data-dependent. We believe Banxico will continue to cut the pol

Banxico Preview: Ready to Start Cutting

March 19, 2024 2:40 PM UTC

The Banxico board will meet on Mar. 21 to decide the policy rate after 12 months of unchanged rates at 11.25%. With inflation now at 4.4% and signs of economic deceleration, a cutting cycle is anticipated. Banxico's exclusion of forward guidance hints at potential cuts, despite possible dissent amon

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

EMFX: Carry and Domestic Fundamentals Rather Than the USD

February 22, 2024 10:00 AM UTC

Bottom Line: Most major EMFX currencies have performed better than the Euro or the Japanese Yen against the USD in 2024 (Figure 1).  This is due to carry trades in Latam, but elsewhere reflects global equity love on Indian equities or domestic fundamentals.  This resilience for Brazilian Real/Indi

Banxico Review: Policy Rate Kept Stable but Doors Open for a Cut in March

February 9, 2024 2:05 PM UTC

Banxico maintained the policy rate at 11.25%, hinting at a potential cut in March. External rates had minimal impact on Mexico's economy due to the strong peso and interest rate spread. Despite past growth, recent data suggests a deceleration. Banxico remains optimistic amidst inflation, potentially

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

Banxico Preview: Cuts are Coming but it Still too Soon

February 5, 2024 6:03 PM UTC

Banxico's Feb. 8 meeting holds crucial decisions on the policy rate at 11.25%. Despite global trends, cautious Banxico may delay cuts due to Mexico's robust labor market and positive output gap. Expenditure plans and CPI data on the meeting day shape Banxico's considerations. While a 20% chance of a

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 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

Banxico Review: No Cuts and Same Message

December 15, 2023 3:25 PM UTC

Figure 1: Mexico Policy Rate (%)
Source: Banxico
The Mexico Central Bank (Banxico) has decided on the policy rate (Overnight). The board has unanimously chosen to keep the Overnight unchanged at 11.25%. The communique has had a neutral tone; with positive news, there are comments on core CPI, which de

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

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

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

Mexico CPI Review: Inflation continue to Fall

October 9, 2023 7:10 PM UTC

Figure 1: CPI Figure by Group (%, m/m)
Source: INEGI
The Mexico National Statistics Institute (INEGI) recently released the Consumer Price Index (CPI) data for September. These figures indicate a 0.4% month-on-month (m/m) increase in the index, aligning with the majority of market expectations. Conseq

LatAm Outlook: Growth Continues

September 28, 2023 8:46 PM UTC

Our Forecasts
Risks to Our Views
Source: Continuum Economics
Brazil: Brighter than Expected
The Brazilian economy has surpassed expectations in the first half of this year. In the initial quarter, robust growth was predominantly driven by an exceptional surge in the agricultural sector, as soybean produ

Mexico CPI Review: CPI at 0.5% (m/m)

September 7, 2023 6:27 PM UTC

Figure 1: Inflation by Groups (%, Y/Y)
Source: INEGI
The Mexico Statistic Institute (INEGI) has released the CPI figures for August. Notably, the CPI index has grown 0.5% in August in line with market expectations and our preview (here). Therefore, the Y/Y index has decreased to 4.6% from 4.8%. Core p

Mexico CPI Preview: Inflation Continuing to Fall but Core Prices Sticky

September 5, 2023 2:18 PM UTC

Figure 1: Mexico’s CPI (y/y, %)
Source: INEGI and Continuum Economics
The Mexico Institute of Statistics (INEGI) is scheduled to unveil the Consumer Price Index (CPI) data for August on Sep 9. Our forecasts indicate a 0.5% month-on-month increase in inflation. Consequently, year-on-year (y/y) inflat

Mexico CPI Review: Generally Falling, but Services Accelerate

August 9, 2023 3:18 PM UTC

Figure 1: Inflation by Groups (%, Y/Y)
Source: INEGI
The Mexico Statistic Institute (INEGI) has released the CPI figures for July. Notably, the CPI index accelerated from the last months, growing 0.5% in July, but due to high base effects, Y/Y CPI has decreased to 4.8% from 5.1% in June. The figures w

Mexico CPI Preview: Inflation Continuing to Fall but Core Prices Sticky

August 8, 2023 12:12 PM UTC

Figure 1: Mexico’s CPI (y/y, %)
Source: INEGI and Continuum Economics
The Mexico Institute of Statistics (INEGI) will release the Consumer Price Index (CPI) data for July on August 9. Our projections indicate a 0.5% month-on-month increase in inflation. As a result, year-on-year (y/y) inflation is a

Mexico CPI Preview: Inflation to Continue to Fall in June

July 5, 2023 7:01 PM UTC

Figure 1: Mexico’s CPI (y/y,%)
Source: INEGI and Continuum Economics
The Mexico Institute of Statistics (INEGI) is scheduled to release the Consumer Price Index (CPI) data for June on Jul. 7. Based on our analysis, we anticipate a marginal increase of 0.1% in the CPI index during June. This would re

LatAm Outlook: Lower Inflation and Growth above Expectations

June 21, 2023 9:27 AM UTC

Our Forecasts
Risks to Our Views
Source: Continuum Economics
Brazil: Higher Agricultural Production and Lower Inflation
The Brazilian economy experienced robust growth in the first quarter of 2023, with a notable expansion of 1.9% quarter-on-quarter (here). This growth was primarily driven by a remarkab

April 27, 2023 1:06 PM UTC

Mexico:
Figure 1: Mexico Exports and Imports (12 months sum, USD Bn)
Source: INEGI
Mexico’s main trading partner is the United States, which corresponds to 80% of their exports values. Additionally, Mexico is a relatively open economy as trade corresponds to around 40% of Mexican GDP. The main story

LatAm Outlook: Putting the Gears Down

March 24, 2023 3:09 PM UTC

Our Forecasts
Risks to Our Views
Source: Continuum Economics
Brazil: Handbrakes on
The Brazilian economy has begun to show signs of deceleration as the effects of the contractionary policy are starting to be felt. Q4 GDP (here) has marginally contracted (-0.2% q/q), and the strong impetus that the servi

EM Relief from Peak Fed Rates?

August 10, 2022 8:20 AM UTC

Figure 1: USD Real Effective Exchange Rate (2010 = 100)
Source: Datastream, Continuum Economics
Fed Peaking and EM FX and Bond Yields
Financial markets are now discounting that the Fed will finish tightening by the December FOMC meeting, and our June Outlook (here) highlighted the view that we will s

Mexico: Moody’s Downgrades Mexico, but Is It That Bad?

July 13, 2022 10:51 AM UTC

Figure 1: Mexico Selected Indicators
Source: Datastream, SHOC, Continuum Economics
Moody's recently downgraded the Government of Mexico's unsecured long-term ratings to Baa2 from Baa1. The decision was mostly justified not by the short-term consequences of Mexico's fiscal policy but rather by the lon

LatAm Outlook: Real Wage Squeeze Hits Consumption

June 17, 2022 10:44 AM UTC

Our Forecasts
Source: Continuum Economics
Risks to Our Views
Source: Continuum Economics
Brazil: Consumer Recession Risks and Less BCB Easing
The really bad news is that Brazil faces a big real wage squeeze in 2022. We project CPI inflation to average 10.0% in 2022, due to the feedthrough of energy and