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Likely To Outperform The Region (Latin America Monitor - Caribbean)

Thu, 18 Jun 2009 00:00 GMT

The Belizean economy expanded by 3.0% in 2008, shaking off the impact of two tropical storms that caused economic losses estimated to have totalled US$75mn (5.4% of GDP). This year the global recession will cause a slowdown in the local economy as reduced tourism receipts and remittances will hurt domestic demand in addition to reduced foreign direct investment (FDI) inflows. Partially as a result of favourable base effects, we see Belize outperforming the region this year, with a real GDP contraction of just 0.3%. Indeed, a recovery in the agricultural sector and continued expansion of the energy sector will help

Coup Unlikely To Prompt Military Conflict (Latin America Monitor - Central America)

Mon, 29 Jun 2009 00:00 GMT

BMI View: Despite the threat of a military response by Venezuela and regional allies, we do not believe the apparent military coup in Honduras will prompt a full-scale war. With all international actors in support of exiled-President Manuel Zelaya, including the EU, UN and US, Zelaya's opponents appear to have little alternative other than negotiation.

Remittance Collapse To Hurt Growth (Latin America Monitor - Caribbean)

Wed, 17 Jun 2009 00:00 GMT

We expect a 20% fall in remittances to be a major contributor to falling private consumption this year. As private consumption represents 83% of Jamaican GDP, a reduction in consumer spending is a major factor behind our 4.0% real GDP forecast for this year.

CLP: A Convincing Case For Medium-Term Strength (Latin America Monitor - Southern Cone)

Wed, 24 Jun 2009 00:00 GMT

With the government announcing additional US dollar sales to the tune of US$40mn a day, the Chilean peso has flown to a nine-month high of CLP533.75/US$, taking out key resistance at CLP547.00/US$ along the way. While we see scope for further short-term gains towards CLP510.00/US$, we believe that further appreciation will be capped as the market price in the daily interventions, especially with financial market volatility showing signs of a possible comeback.

Macroeconomic Forecast Bolivia (Latin America Monitor - Andean Group)

Wed, 24 Jun 2009 00:00 GMT

Bolivia's inflation rate continues to tumble, coming in at 3.2% y-o-y in May, down from 5.3% y-o-y in April and 16.8% y-o-y in April 2008. Despite the slowdown in export demand and the outperformance of the Bolivian boliviano against a number of regional currencies, the extent of the slowdown in price growth has surprised us.

Can't Keep A Good Economy Down (Latin America Monitor - Brazil)

Wed, 10 Jun 2009 00:00 GMT

First quarter real GDP data supports our view of a prompt economic recovery in Brazil. With the economy demonstrating a remarkable resilience to the global economic crisis, we reiterate our belief that the country will remain a firm favourite amongst investors over the long term.

Monetary Easing: The End Of The Road (Latin America Monitor - Southern Cone)

Mon, 22 Jun 2009 00:00 GMT

BMI View: Latin America's record breaking monetary easing cycle is winding down, with only a few minor cuts in the pipeline in H209. Should policymakers draw cycles to a close as expected in the weeks ahead, we are concerned that Latin America's local debt markets would start to look increasingly vulnerable.

Imports Collapse Ominous For Future Growth (Latin America Monitor - Mexico)

Fri, 26 Jun 2009 00:00 GMT

BMI View: Collapsing imports continue to bolster Mexico's trade year-to-date surplus, which rose to US$890mn in May from US$210mn the previous month. While the rate of decline, down 31.7% y-o-y so far this year, means we are now pencilling in a small trade surplus US$860mn for Mexico in 2009, it also highlights how poorly domestic economic activity is performing in the current downturn, suggesting to us that a significant recovery is still a long way off.

A False Dawn For Inflation (Latin America Monitor - Andean Group)

Wed, 08 Jul 2009 00:00 GMT

BMI View: The recent moderation in Venezuela's headline rate of consumer price growth masks a steady build-up of latent inflationary pressures in the economy. Notwithstanding the downward pull of decelerating activity, we caution that expansionary monetary and fiscal policy will keep the heat on consumer prices. As such, we are sticking with our end-2009 and end-2010 inflation forecasts of 40.0% and 50.0%, respectively.

Macroeconomic Forecast Uruguay (Latin America Monitor - Southern Cone)

Tue, 07 Jul 2009 00:00 GMT

Uruguay's current account posted a US$353mn surplus in the first quarter of 2009, significantly higher than the US$121mn surplus posted a year earlier. We attribute this largely to a sharp drop off in imports during this period as recessionary forces led to an adjustment in the trade balance. The goods and services trade surplus jumped 92.5% year-on-year (y-o-y) to US$487mn during the first quarter of this year, as imports of goods and services fell 19.7% y-o-y, while exports were down just 7.5%. On the back of this we are revising down our 2009 current account deficit forecast to 0.8% of GDP from 4.4% previously.

Macroeconomic Forecast Chile (Latin America Monitor - Southern Cone)

Tue, 07 Jul 2009 00:00 GMT

Economic activity in Chile, as measured by the IMACEC index, contracted for the seventh consecutive month in a row in May, falling 4.4% y-o-y, following a 4.6% contraction a month earlier. The decline in economic activity during the first two months of Q209 suggests to us that the economy likely experienced a deeper slump in the second quarter of the year than in Q109, when real GDP contracted by 2.1% y-o-y. Coming against the backdrop of very weak industrial output data in May (-10.5% y-o-y), we note that there are significant downside risks to our 0.1% real GDP growth forecast for this year.

First-Round Debate Knock-Out For Frei (Latin America Monitor - Southern Cone)

Tue, 07 Jul 2009 00:00 GMT

Chilean presidential candidates faced off in their first televised debate on July 1, addressing public security. Five out of the six candidates were present at the debate, which saw Marco Enríquez-Ominami - the dissident socialist candidate who defected from the ruling Concertación de Partidos por la Democracia (CPD) coalition - attack the official CPD candidate and former Chilean president Eduardo Frei (1994-2000) on the issue of a presidential pardon extended to a drug trafficker during his term. Criticism on this issue was also expressed by the right-wing opposition front-runner Sebastían Piñera via video link. In terms of public security, Frei and the CPD undoubtedly suffered a first-round defeat ahead of the December 13 election.

Mounting Pressure For Unity Ahead Of Election (Latin America Monitor - Southern Cone)

Tue, 07 Jul 2009 00:00 GMT

With the June primaries in the bag, there is growing pressure on the ruling Frente Amplio (FA) coalition to rally behind the presidential candidate for October's poll, José Mujica, who won the nomination with a convincing 50%. Indeed, pressure has been mounting on Danilo Astori, who garnered just 38% of the vote, to settle his differences with the former Tumaparo guerrilla and run on a joint ticket in October. This comes after Jorge Larrañaga, who lost out to former president Luis Alberto Lacalle for the opposition Blancos nomination with 14 percentage points, who was quick to settle his differences and accept the nomination for vice president. The early show of unity from the Blancos could prove crucial in the upcoming election.

Macroeconomic Forecast Nicaragua (Latin America Monitor - Central America)

Mon, 06 Jul 2009 00:00 GMT

On 23 June, President Daniel Ortega sent a proposal to congress to reduce the current budgeted expenditure by US$40.0mn, based on a forecast fall in total government revenue of US$127.6mn. The spending cuts will particularly impact upon education (US$3.8mn) and health (US$6.5mn). Even with the cuts, we are still downbeat on Nicaragua's fiscal prospects this year, and reiterate our nominal deficit projection of US$460.5mn (6.6% of GDP), a situation exacerbated by the recent decision by the US to hold back US$64m in aid disbursed through the Millennium Challenge Corporation (MCC).

Martinelli Sworn In (Latin America Monitor - Central America)

Mon, 06 Jul 2009 00:00 GMT

With heightened political risk hitting the headlines in several Central American countries - most notably Honduras, Guatemala and Nicaragua - the smooth transition of power in Panama in July reaffirmed our long-term confidence in the country's political and economic outlook. Ricardo Martinelli officially assumed the presidency at the beginning of the month from outgoing Martín Torrijos, and immediately pointed to the need to boost foreign investment to boost local activity. Unsurprisingly, Panama comes in well above average in our short-term political ratings, with its score of 76.9 well above the regional mean of 60.1.