Chile: Two Activity Roads Diverged More

Chile: Two Activity Roads Diverged More

Nader Nazmi, Oscar Munoz - Market Economics
Latam Macro Snapshot | 28 Jun 2013 18:26 | 242 Kb

Supply and demand data diverged further in May. Retail sales data showed continued strong consumer demand while manufacturing and IP data reflected slowing production. Manufacturing production declined 4.2% y/y in May, surprising our and market expectations projecting expansions of 1.3% and 1.7% y/y, respectively. The setback in manufacturing production was broad-based with eight of its thirteen divisions retreating in the month. Apart from being impacted by a high comparison base, the main contribution to the annual contraction came from lower production of chemicals (-12.6% y/y).

Chile: Manufacturing is weakening, despite April bounce

Chile: Manufacturing is weakening, despite April bounce

Nader Nazmi - Market Economics
Latam Macro Snapshot | 30 May 2013 18:07 | 327 Kb

Manufacturing production expanded 3.4% y/y in April, in line with our 3.6% y/y call, and better than the consensus projection of 2.9% y/y. The main contribution to the annual gain came from increased production of processed food (+13.7% y/y). Despite the rebound, manufacturing growth in April is disappointing, especially given that this April had two more working days than April 2012.

Peru: Deteriorating terms of trade and trade balance in Q1

Peru: Deteriorating terms of trade and trade balance in Q1

Nader Nazmi, Oscar Munoz - Market Economics
Latam Macro Snapshot | 13 May 2013 20:37 |

The trade balance shifted to a deficit of USD 29mn in Q1 from a surplus of USD 1.5bn in Q4. On a 12-month accumulated basis, Peru’s trade surplus narrowed to USD 3.4bn in March from USD 10.8bn a year ago.

Chile: Deeper Deflation than Expected

Chile: Deeper Deflation than Expected

Nader Nazmi - Market Economics
Latam Macro Snapshot | 08 May 2013 14:04 |

Consumer prices declined 0.5% m/m in April. The monthly decline exceeded the 0.1% m/m drop that the consensus and we had anticipated. The main difference was a 2.0% m/m decline in transportation prices, which subtracted 0.4pp from headline inflation. The decline in transportation prices was driven by a 13.2% m/m drop in bus fares due to holiday-related factors.

Chile: Growth Disappoints in March and in Q1

Chile: Growth Disappoints in March and in Q1

Nader Nazmi - Market Economics
Latam Macro Snapshot | 06 May 2013 14:50 |

Chile’s monthly GDP (Imacec) fell well short of expectations with growth slowing to a 20-month low in March. Real GDP growth decelerated from 3.8% y/y in February to 3.1% y/y in March compared to the consensus and our projections of 4.7% y/y and 5.1% y/y, respectively. A 3.0% y/y contraction in manufacturing output was the main drag on growth, as expected. Growth in the service sector (+4.1% y/y), however, also disappointed. Mining output increased 6.9% y/y.

Chile – Consumer confidence retreats in March.

Chile – Consumer confidence retreats in March.

March consumer confidence fell to 56.8 from 58.1 in February. This was the lowest confidence level since a 53.4 print reached in November. However, compared with last March, consumer confidence improved 22.9%. We continue to expect a gradual moderation in domestic demand during the year, helping to keep inflation in check and the policy rate steady.

Chile

Chile

In a broadly neutral statement – and as expected – the Central Bank of Chile (BCCh) kept its policy rate unchanged at 5.0%. The board maintained its data-dependent stance and further reinforced our call for the bank to remain on hold for the foreseeable future.

Chile: Feeble February Growth

Chile: Feeble February Growth

Nader Nazmi - Market Economics
Latam Macro Snapshot | 05 Apr 2013 |

Growth of real GDP, as measured by its monthly proxy Imacec, decelerated from 6.5% y/y in January to 3.8% y/y in February. This is in line with our 3.9% y/y forecasts but falls well short of the 4.8% y/y median estimate from the Bloomberg survey.

Chile: IPoM – Life is Good, Why Change?

Chile: IPoM – Life is Good, Why Change?

Nader Nazmi - Market Economics
Latam Macro Snapshot | 02 Apr 2013 17:11 |

The Monetary Policy Report (IPoM) released today makes it clear that the central bank (BCCh) will remain on hold for the foreseeable future as it expects trend growth and on-target inflation. The base scenario is as good as it gets but the BCCh remains mindful of risks. Nothing lasts forever. The IPoM’s key conclusions are supportive of our view that BCCh will remain on hold this year.

Chile: All Reasons Lead to a Longer Pause

Chile: All Reasons Lead to a Longer Pause

Nader Nazmi - Market Economics
Latam Macro Snapshot | 01 Apr 2013 21:13 |

According to the minutes of the 14 March monetary policy meeting, there are good reasons to cut and there are good reasons to hike. But, on balance, all reasons lead to a longer pause.

Chile: All Signs Point to Buoyant Domestic Demand

Chile: All Signs Point to Buoyant Domestic Demand

Nader Nazmi - Market Economics
Latam Macro Snapshot | 18 Mar 2013 17:17 |

Data releases today confirm that domestic demand strength underpinned a rapid rise in real output and widened the current account deficit in Q4. Recent data indicate that early in Q1 domestic demand continued to grow at a pace that likely exceeded the economy’s potential, increasing the risk of overheating.

Chile: All quite on the inflation front

Chile: All quite on the inflation front

Nader Nazmi - Market Economics
Latam Macro Snapshot | 08 Mar 2013 13:37 |

Consumer prices rose only 0.1% m/m in February, less than the consensus 0.3% m/m call and our own 0.2% m/m projection. Annual inflation dropped to 1.3% y/y, sinking further below the 2% floor of BCCh's target band (Chart 1).

Chile: Growth was rapid in January

Daily Latam Spotlight - 6 March 2013

Chile: Growth was rapid in January

The monthly proxy for real GDP, Imacec, expanded 6.7% y/y in January. This is in line with our 6.8% y/y forecast and slightly above the median estimate from the Bloomberg survey of 6.5% y/y. Growth was rapid across the board. Mining activity expanded 8.4% y/y, manufacturing advanced 4.4% y/y and services rose 6.9% y/y. The three-month moving average of GDP growth was 5.6% y/y in January, the same as in the month before. In monthly terms, real output rose 0.1% m/m in January, and was 17.0%, saar above Q4.

Chile: Steady Rate as the Only Option, Despite Concerns

Chile: Steady Rate as the Only Option, Despite Concerns

Nader Nazmi - Market Economics
Latam Macro Snapshot | 01 Mar 2013 19:19 |

Neutral rate and stance. We read the minutes of the 14 February monetary policy meeting as broadly neutral regarding the short-term outlook, ruling out any changes in the policy rate for now. According to the minutes, the policy rate remains within a neutral range and the decision to keep it steady at 5.0% was unanimous.

Chile: Happy 2013 Beginning for Activity

Chile: Happy 2013 Beginning for Activity

Nader Nazmi - Market Economics
Latam Macro Snapshot | 28 Feb 2013 15:06 |

According to data releases today, the economy began the year on a strong note. In January, manufacturing output surprised to the upside, retail sales expanded rapidly and unemployment fell to a six-year low. The monthly proxy for real GDP (Imacec) due out next Tuesday is thus set to reflect rapid economic expansion in January. We project a 6.8% y/y rise in the Imacec in the first month of the year. Rapid growth supports our view that fiscal and monetary policies need to turn less accommodative to reduce the risk of overheating. Chile continues to exhibit strong growth

Chile – We look for stronger IP and retail sales data this week

25 February 2013

Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics
Daily Latam Spotlight | 25 Feb 2013 06:00 |

Chile – We look for stronger IP and retail sales data this week.

The focus this week will be on January industrial production and retail sales data, both due out on Thursday. We look for another month of performance divergence between manufacturing production and retail sales. Manufacturing production likely rebounded in annual terms in January, rising 3.6% y/y. In sequential (sa) terms, we look for a +1.9% m/m rebound in January, following a 2.2% monthly contraction in December. Real retail sales are estimated to have contracted in sequential terms in January, but should still post a strong 9.8% gain over a year ago.

Chile: Robust economic performance continued in December

Chile: Robust economic performance continued in December

Florencia Vazquez - Market Economics
Latam Macro Snapshot | 05 Feb 2013 14:03 | 42 Kb

Economic activity was reported to have advanced 4.7% y/y in December according to the monthly proxy for real GDP (Imacec) unveiled by the central bank. Performance stood fairly in line with our forecast and visibly ahead of the Bloomberg consensus (4.8% and 3.7% y/y, respectively).

Chile: Mixed supply- and demand-side activity data in December

Chile: Mixed supply- and demand-side activity data in December

Florencia Vazquez - Market Economics
Latam Macro Snapshot | 30 Jan 2013 14:04 |

Manufacturing activity was reported to have contracted 2.5% y/y in December, a result that disappointed both our forecast and the median estimate from the Bloomberg survey (0.8% and 1.0% y/y, respectively). Despite weak performance in recent months, manufacturing output managed to advance 2.4% last year.

Peru: No capital controls, but USD purchases by the finance ministry to help stem SOL appreciation.

Peru: No capital controls, but USD purchases by the finance ministry to help stem SOL appreciation.

Central Reserve Bank of Peru President Julio Velarde on Friday said that capital controls are not needed for stemming the pace of SOL appreciation. He said that he has never considered capital controls as an option and that the sol appreciation reflects its strong fundamentals. Finance Minister Luis Miguel Castilla announced government plans to purchase as much as USD 4.0bn this year to help the central bank control the pace of SOL appreciation. According to Minister Castilla, proceeds from USD purchases will be used to service and prepay external debt, as well as increase savings in the country’s Fiscal Stabilization Fund (FEF).

Mexico: December trade balance – Strong headline; weak results

Mexico: December trade balance – Strong headline; weak results

Nader Nazmi - Market Economics
Latam Macro Snapshot | 25 Jan 2013 17:12 | 81 Kb

Here is the good news. Mexico reported a December trade surplus of USD 962mn while the consensus was expecting a deficit of USD 936mn. Now, the not-so-good news. Both imports and exports were weak and the surplus is explained by the fact that imports were weaker than exports.