Economic Snapshot for Latin America
November 18, 2020
Latin America’s economy is poised to recover in 2021
After logging its worst recession in recent history this year due to the Covid-19 blow, Latin America’s economy is poised to recover in 2021 as foreign demand and domestic activity revive. That said, significant risks lie ahead, most notably subdued household incomes, concerns over enormous fiscal gaps, uncertainty regarding the pandemic’s trajectory, and social upheaval.
Latin America Monetary & Financial Sector News
Regional inflation climbed to a preliminary 6.2% in October (September: 5.9%), primarily driven by stronger price pressures in Brazil. Notably, in Colombia, inflation declined to its lowest in over 50 years amid weak consumer demand. After a noticeable drop this year due to output gaps and low oil prices, regional inflation is seen rising in 2021 in line with the economic recovery.
The central banks of Brazil, Chile, Colombia, Paraguay and Uruguay held policy rates stable at multi-year lows in recent weeks in a bid to further support their economies amid ongoing Covid-19 woes. Meanwhile, Argentina’s monetary authority loosened its stance. Policymakers overall are expected to maintain relatively expansionary stances next year.
Currency performance across the region was mixed in recent weeks. Although some currencies like the Peruvian sol and Uruguayan peso weakened against the USD, others such as the Brazilian real and Mexican peso benefited from upbeat sentiment over a likely Joe Biden presidency in the U.S. Overall, currencies are projected to depreciate next year, albeit only slightly.
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Latin America Economic News
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Chile: Business confidence hits highest reading in over one-and-a-half years in November
December 4, 2020
Business confidence rose to 54.2 in November from October's 51.7.
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Uruguay: Inflation hits eight-month low in November
December 4, 2020
Consumer prices rose 0.28% in November over the previous month, a softer increase than the 0.58% rise logged in October.
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Peru: Business sentiment hits 10-month high in November
December 3, 2020
Business confidence rose to 52.8 in November, up from October’s 50.2 and marking the seventh consecutive monthly increase as firms reacted positively to the continued easing of restrictions on activity.
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Chile: Copper prices surge in November
December 3, 2020
Copper prices soared from the previous month in November as healthier demand prospects fueled by the announcements of several effective Covid-19 vaccines galvanized markets.
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Brazil: Economy bounces back at record pace in Q3
December 3, 2020
The economy bounced back robustly in the third quarter, growing at the quickest rate on record as the easing of Covid-19 containment measures and sizable fiscal stimulus enabled the gradual firming of activity.
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