_Economy and Finance

Brazil: Inflation finishes 2012 above target Gustavo Arruda - Market Economics Latam Macro Snapshot | 10 Jan 2013 14:34 | IPCA inflation ended 2012 at 5.84%, and we see more upward pressure going forward. The annual reading was above the 4.5% official target centre, although still below the target tolerance ceiling of 6.5%. In the annual comparison, inflation will continue to increase in the coming months, in our view. We fear it may breach the inflation target ceiling of 6.5% already during the first half of the year.

Brazil: Retail sales – Moving up in a non-linear pace Gustavo Arruda - Market Economics Latam Macro Snapshot | 13 Dec 2012 13:52 | October retail sales grew 0.9%m/m, slightly above consensus of +0.8m/m and better than the September reading of 0.3%. Within sectors, three of ten sectors contracted (apparel contracted for the third month in a row). Durable goods (the most credit-related component) gained 1.4%m/m or 13.0%y/y, while non-durable goods expanded 0.1%m/m or 6.7%y/y. Broad retail sales (including construction and vehicles sales) jumped 8%m/m in October from -8.7%m/m a month earlier, due to tax breaks on vehicles sales. Looking forward, we expect retail sales to decelerate in November due to an unusually extended holiday, but they should bounce back in December. Despite volatility in these releases, we believe the trend in retail sales will probably strengthen, on the back of monetary, fiscal and credit measures - all focused on spurring growth.

Florencia Vazquez,Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics Daily Latam Spotlight | 13 Dec 2012 06:00 | Brazil: Today, retail sales will probably prove robust again. BRAZIL We expect real retail sales to increase 1.2% in monthly terms, judging by coincident indicators. This represents annual growth of 9.8% y/y. Broad retail sales, which includes vehicles and construction spending, will show robust growth in monthly and annual terms, due to tax breaks.

Florencia Vazquez,Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics Daily Latam Spotlight | 04 Dec 2012 06:00 | Brazil: Industrial production will rebound in October BRAZIL Today, industrial production (IP) will rebound, according to coincident data, including energy consumption, car output, heavy vehicle traffic on toll roads and paperboard sales. A month earlier, an unusually few number of working days led to a soft IP number in seasonally adjusted terms.

http://www.investmenteurope.net/ Peru, Chile and Mexico are Societe Generale's favourites for LatAm investments By: Chiara Albanese 27 Nov 2012 Despite the global slowdown, favorable domestic conditions have supported the growth of Latin America's most open economies, such as Peru, Chile and Mexico, and forecasts suggest strong capital inflows for 2013 which will fuel credit growth, according to Societe Generale.

Florencia Vazquez, Marcelo Carvalho, Nader Nazmi, Gustavo Arruda - Market Economics Daily Latam Spotlight | 20 Nov 2012 06:00 | Brazil: Consensus revised down growth for next year. BRAZIL Local markets will be closed today due to a local holiday. Consensus expects less growth ahead. Consensus has revised down 2012 growth to 1.52% from 1.54% in the prior week. For 2013, consensus anticipates growth below 4.0% next year (at 3.96% from 4.0%). We continue to believe that Brazil’s economy will continue to accelerate in the coming quarters, and partial data for October reinforce our view. We expect growth above 5.0% next year, thanks to monetary, fiscal and credit measures in place to spur growth.

Brazil: The Week Ahead - The Hunt for Red October Marcelo Carvalho - Market Economics Brazil: The Week Ahead | 09 Nov 2012 16:30 | You may have seen the film. The 1990 movie “The Hunt for Red October” is a thriller adapted from the Tom Clancy novel of the same name. In the story, Red October is the name of the new Soviet submarine that sonars are unable to detect. Sean Connery plays the commanding officer of the boat. Currently in Brazil, bearish forecasters seem to be hunting for a red October on growth data.

Brazil: Consensus revised down interest rates scenario. 2011.11.14 08:23 AM Consensus scenario incorporated more rate cuts. The central bank's weekly survey presented small changes on the inflation front, remaining at current high levels. For growth, the market consensus revised down just its 2011 forecast, but kept stuck the 2012. For monetary policy, consensus extended its easing cycle by 50bp and now foresees a full easing cycle of 250bp.

Early signs of moderation. The central bank's monthly proxy for real GDP growth (IBC-Br) increased 0.2% m/m s.a. in May (consensus: 0.4% m/m), after an increase of 0.5% m/m in April. As a reference, the average monthly pace during Q1 2011 was 0.5% m/m. The annualized 3-month moving average is now running at 4.2% m/m s.a.a.r. (seasonally adjusted annual rate). That is significantly lower than the 6.0% pace in March, and good news given the need to cool the economy below potential in order to curb underlying inflation pressures. Most estimates of “potential” growth fall in the 4.0%-5.0% range. The year-on-year comparison actually accelerated to 4.3% y/y from 2.5% y/y a month before.

Brazil: Inflation and rates expectations move higher Inflation expectations pick-up. The latest weekly survey of market consensus forecasts brought upward revisions to inflation expectations across all horizons.

Monthly IPCA inflation slowed in June, to 0.15% m/m (consensus was 0.07%), down from 0.47% m/m a month earlier (or from 0.23% m/m in mid-month IPCA-15 inflation), helped by seasonal factors. Transport and food prices were the main driver for the deceleration, as food price inflation fell into negative terrain, while transport price deflation got deeper. Transport price deflation intensified to -0.61% in June from -0.24% a month before, mainly on a decline of 4.25% on fuel prices (mostly ethanol, but also gasoline), despite a jump in airfares (from -11.57% to 12.85%). Food price inflation swung to -0.26% from 0.63% a month before.

BRAZIL The manufacturing PMI survey continued to decline, sliding to 49.0 in June from 50.8 in May, after a recent peak of 54.6 in February, and falling below the 50.0 mark for the first time since late last year.

BNP Paribas : BRAZIL The unemployment rate in May was 6.4%, unchanged from April and in line with the consensus view. On a seasonally adjusted basis, the unemployment rate rose to 5.9% from a record low 5.8% reached in April. Both the payroll and the labor force expanded in May, by 0.4% m/m s.a. and 0.3% respectively.

Brazil talks tough on inflation, urges gov't to help Thu Jan 27, 2011 4:47pm EST Brazil's budget deficit, including debt repayments, stood at 14.4 billion reais ($8.6 billion) in November, nearly five times larger than a year earlier. JOBS, INFLATION SURGING Neil Shearing, senior emerging markets economist at Capital Economics Ltd in London, said the central bank's minutes "are unequivocally hawkish." "If there were any lingering doubts as to whether or not (the central bank) would shift priorities under the new governor, Alexandre Tombini, I think they've been well and truly banished now," Shearing said. (more)