Other Macro Dashboards: Latin America - Brazil - Chile - Colombia - Mexico - Argentina - Uruguay Activity A short guide to Peruvian macro data Interested in activity, prices, monetary, fiscal, external sector, and financial data for Peru? There are loads of datasets, see for example this Repository which has official statistics from INEI and BCRP. However, this short guide will help you find the our "must-see" datasets. Prices Monetary Fiscal External Sector...
Por Mariano Sanchez Moreno (msanchez@alphacast.io) Más Alphacast Highlights aquí Perspectivas de inflación para los próximos 4 años: sangre, sudor y lágrimas Después de que 2022 haya tenido, con toda probabilidad, la inflación más alta de los últimos 30 años, se espera que la inflación siga siendo alta en el futuro inmediato. Con la cifra estimada para el último año un pelo por debajo del 100%, se espera que los precios sigan y se mantengan en niveles elevados, con encuestas de expertos que pronostican un crecimiento de los precios ligeramente superior para 2023 y un valor más moderado, pero aún extraordinariamente elevado, para 2024. No se espera que los precios se desaceleren significativamente, y las comparaciones históricas muestran grandes riesgos al alza y ofrecen pocas esperanzas de desaceleración. Los intereses de los pasivos remunerados, uno de los principales impulsores de la variación de la base monetaria Los factores monetarios contribuyeron a la mencionada aceleración del crecimiento de los precios, con un aumento significativo de la base monetaria a finales de 2022. En términos netos, el Banco Central aumentó la oferta de moneda en circulación, y su política monetaria contractiva se vio compensada por el pago de intereses de los pasivos remunerados,...
By Maia Mindel (mmindel@alphacast.io) Read more Alphacast Highlights here 1. GDP continued recovering, but weaker conditions resulted in a slowdown Most of Latin America's economies grew in 2022, a continuation from 2021 after the COVID pandemic caused the deepest economic recession in decades, if ever, for the region's economies. However, a combination of global tailwinds, mediocre fundamentals, and an exhaustion of the post-2020 bump meant that most of the region's economies saw slowing growth throughout 2022. The slowdown is posed to continue over the next five years, returning to the tepid growth that plagued the region over the 2010s. 2. High-frequency data shows worsening trend for 2023 Using a weekly economic activity tracker from the OECD, we can see that the region saw little improvement in 2022, and in fact worsened in the final quarter. Activity appears to be close to 2019 levels for all major economies, meaning that the boost to growth that the post-pandemic recovery provided to the region's main economies might be over. Consequently, modest fundamentals and global tailwinds might take over as the defining factor for 2023 performance. 3. The labor market recovered, but at uneven rates Unemployment surged in 2020, as a result of the...
By Mariano Sanchez Moreno (msanchez@alphacast.io) Read more Alphacast Highlights here Inflation outlook for the next 4 years: blood, sweat, and tears After 2022 had, in all likelihood, the highest inflation printing in 30 years, inflation is expected to remain high for the foreseeable future. With the expected figure for the last year being a hair under 100%, prices are expected to follow and remain at elevated levels, with expert surveys forecasting slightly higher price growth for 2023 and a more moderate, but still extraordinarily elevated, value for 2024. Prices are not expected to deccelerate significantly, and historical comparisons show big upside risks and provide little hope of a slowdown. Remunerated liabilities interest payments among key drivers in monetary base change Monetary factors contributed to the previously mentioned acceleration of price growth, with the monetary base growing significantly by the end of 2022. On net, the Central Bank increased the supply of currency in circulation, with its contractionary monetary policy being offset by interest payments on remunerated liabilities, USD purchases, operations with the Treasury, and other factors. 2023 is not expected to be much different, with the looming election and various economic challenges making a disinflationary turn less likely. Monetary emission...
By Milagros Ricchini (mricchini@alphacast.io) Read more Alphacast Highlights here In this hands-on guide, we will show you how to use Alphacast Pipelines to automatize Latin American economies' analysis. In this case, we are going to make a graph of Ecuador's fiscal result and calculate its primary expenditure, which is not a variable of the dataset. First, we look for the dataset which contains the variables we need: Fiscal - Ecuador - BCE - Non Financial Public Sector Operations. The data excerpt in the overview of the dataset shows it contains multiple entities, this is useful information for the next steps in this guide, where we are going to transform the data using pipelines and create the graphs we need. So, the next step is to transform de data by clicking on the right top button "Transform Data" Now it's time for action! As we saw the dataset has multiple entities, first we are going to filter the ones we are interested in, which are overall result, primary result, total expenditures and total revenue included into the entity "Totals": When we click "Save & Preview Data" we can see the dataset we have now: As the entities "Fist Level" and "Second...
After a decade of mediocre performance, with near-zero growth since 2011 and two consecutive years of recession in 2018 and 2019, Argentina suffered a large contraction in 2020 - with GDP dropping by 9.9% in 2020. The recovery, nonetheless, was quick, with a subsequent expansion of 10.4% in 2021. Growth is expected to remain relatively strong, with professional forecasters predicting GDP to increase over 5% in 2022, but with slower rates of growth in 2023 and 2024. The main indicator to watch is inflation, however, which has increased rapidly and in a sustained fashion since 2018, where it reached 45% - and has broken post-2002 records every year except 2020. Price growth in 2022 is expected to close at roughly 100%, and price growth in 2023 is not seen as likely to decrease, with a near-identical expected inflation rate. The coming presidential elections are expected to bring further instability to the economy. Activity Post-COVID expansion continues at moderate pace. The Monthly GDP Estimate for October showed growth of 4.5% YoY, although a moderate contraction of 0.3% MoM, similar to the previous month's figures. In terms of sectors, Hotels and Restaurants showed an extremely strong performance, with most other sectors showing...
Uruguay suffered its largest recession in decades in 2020, and the recovery has been moderate but stable. Output is expected to continue growing in 2022 and 2023, with a reopening of tourism aiding the economy. 2020 came off the back of a decade of slow and uneven growth, averaging 1.3% over the past decade and 0.6% over the past six. Regarding inflation, it has been higher and more volatile than in comparable peer countries, and remains above target - though the recent deviation is larger and more prolonged than any recent ones. The political sphere is expected to remain stable, with the current government being relatively popular. Activity The economy continues running at tepid pace. GDP figures for the third quarter of 2022 were released, and they show a major deceleration, with annual growth halving to 3.7% YoY (from 7.9% YoY in Q2-22) and negative quarterly growth, -0.2% QoQ (versus 1.4% in the previous quarter). Worringly, industrial production had negative growth in October, its worst performance since 2020 - with output dropping -4.2% YoY and-7.4% MoM. Output is expected to increase in 2022 and 2023 after a moderate rebound from the pandemic (4.4%), especially considering expectations for economic conditions; however,...
2020 was the worst slump Mexico suffered since the Great Depression, with GDP dropping 8.5% YoY, and an incomplete recovery (4.8% YoY) in 2021. This follows a very weak decade for Mexican growth, with GDP expanding 1.2% on average in the ten years, but only 0% annually since 2018. The economy is still expected to perform weakly, with expectations in the 1-2% annual range for 2022 and 2023 - especially since Mexico's close economic ties to the United States means that any slowdown in the world's largest economy affects it greatly, a major difference from every other large Latin American country. Activity The Mexican economy retains an unimpressive performance. The Monthly GDP Estimate showed a slowdown in September, with annual growth of 5.2% YoY (versus 5.7% YoY in August) and 0.9% MoM (vs 1.5% MoM). Most major sectors continued growing, led by Primary Activities (8.6% YoY), Manufacturing (8.4% YoY), Retail (6.5% YoY) and Services (5.6% YoY), retaining the relatively robust rates from the previous month. However, both Mining and Construction showed negative results (-2% YoY and -3.8% YoY respectively), and more concerningly, deepened their relatively bad performance compared to August. Growth in 2022 can primarily be explained as a continuing...
Although Brazil's growth has been stagnant for a decade, investment led the best performance since the 2014 crisis. That said, output is expected to continue growing but at a more moderate pace. Regarding price dynamics, inflation it is already cooling down due to hiking interest rate and tax cuts, mainly on fuels, and energy. The BCB warned that if inflation does not ease, it could increase the Selic rate even more. Despite the electoral cycle and an early, aggressive monetary policy tightening, Brazil is performing a strong fiscal consolidation in 2022. On the other hand, uncertainty prevails regarding the fiscal direction. Brazil awaits the resolution of Congress, aiming to strongly expand the ceiling on public spending in order to meet campaign promises. Activity Brazil's economic activity fell in October by 0.05% due to the effects of the monetary restriction. Although the Central Bank Economic Activity Index (IBC-Br) stood positive (+3.83% YoY), growth has been cooling down since July (+5.7% YoY). Simultaneously, industrial production increased 0.28% monthly, after two months in negative ground. With this result, the industrial sector increased 1.7% YoY but is still 2.1% below the level prior to the pandemic (Feb-20). Results reflect the obstacles faced by the...
Chile was among the fast-growing economies before it was hit by political turmoil in 2019. Ten years' growth is 2.1%. That said, it grew fast after the pandemic and nowadays it is 9% above that level. Stronger consumption was financed by three partial withdrawals of pension savings. Not only is it the single economy in the region that is contracting in 2022 but it is expected to contract in 2023 as well. Regarding inflation, they showed the worst performer of the year. The rejection of the constitutional amendment may lead to a more market-friendly path ahead. Nonetheless, social unrest, volatile copper prices, and the government’s weak parliamentary position imply a highly uncertain scenario. Activity In 2023 GDP is expected to fall 1.5%. In October, Chile's Monthly GDP Estimate grew for the third time in the year, by 0.55% MoM, while in annual terms it fell -1.3%. This growth was pushed by the mining sector (+6.4% MoM) and wholesale and retail trade (+0.4% MoM), offsetting the fall of the tertiary sector (-0.6% MoM) and of the industrial sector (-1.5% MoM). The slowdown of activity in 2022 can be explained by the cease in the Covid-19 transfers and the lack of impulse...
Pedro Castillo was dismissed for trying to dissolve the legislative House and to establish an "exception government". Consequently, Dina Boluarte took over in his place. Far from being resolved, the conflict deepened, social discontent heated up and the government declared a state of emergency on December 14. Despite the recent slowdown, Peru is recording one of the highest rates of growth in the last decade across LATAM, only behind Colombia. That said, Peru has been struggling to return to its pre-Covid growth trend. Regarding capital markets, a larger global economic slowdown would undoubtedly have negative reverberations on Peru’s copper returns and economy. The Central Bank is not discarding further hikes of the interest rate if inflation is not lowered within the target range. On a positive note, Peruvian fiscal and external balances are showing strong performance. Moreover, both outstanding debt level (34% GDP), and interest burden (1.4% GDP) are quite low. Activity Peru's economic activity lost dynamism in the second half of 2022. The Q3 closed at 1.7%, slowing down its pace compared to the previous ones (vs. +3.8% Q1, +3.3% Q2). Growth was tempered to a greater extent by the contraction of primary production (-1.1% Feb-22, -0.8% Sep-22). Mining...
All in all, the macro state of affairs shows several warning signs, which the consensus incorporates in its figures by pointing to a slowdown to 2.3% in 2023. Consumption is posed to decelerate in the context of high inflation (headline 12% YoY, food 27%) as real wage contracs. With the highest figure in the region, 75% out of Colombia's global demand is explained by private consumption. The country faces a large, risky twin deficit of the Current Account (-6.5%) and Fiscal Account (-5.9%). That said, the Governmet interest payments account for as much as 3.9% of GDP. Activity Colombia is the fastest-growing economy in the region. It is expected to grow 7.6% in 2022 fueled by the growth of exports, remittances and a positive fiscal shock pushed by the electoral cycle. Colombian Monthly GDP Estimate fell -0.6% MoM in October (vs. -0.03% in September) and it is 4.6% above the previous year's level. In addition, it was mainly boosted by tertiary sector activities, such as professional and business services, with a 0.1% MoM rise, while secondary and primary activities showed negative variations of -1.5% and -2.1% MoM, respectively. Inflation Given the government's expansionary policies and similar pressures from the supply...
Our Debt Sustainability Model uses the standard debt dynamic equation to generate forecasts for the Debt/GDP ratio throughout the next 10 years. Specifically, we use the following equation: $$ d{t+1} =d{t}\biggl[(1-\alpha)\biggl(\frac{1+i{dt}}{(1+gt)(1+\pit)}\biggl) +(\alpha)\biggl(\frac{(1+\Delta\epsilont)(1+i{ft})}{(1+gt)(1+\pit)}\biggl)\biggl] + pdt $$ In which: $$d_{t+1}$$ is the ratio Debt/GDP for the t+1 period; $$\alpha$$ is the share of foreign debt in relation to total debt; $$g_t$$ is the real growth of GDP at the period t; $$\pi_t$$ is the variation of the GDP deflator for the period t; $$\Delta\epsilon_t$$ is the devaluation of the exchange rate between the local currency to the US dollar during the period t; $$i_{dt}$$ is the implicit interest rate for the domestic debt, it is calculated as the ratio between the interest paid for the internal debt during the period t and the internal debt in the period t-1; $$i_{ft}$$ is the implicit interest rate for the foreign debt, it is calculated as the ratio between the interest paid for the internal debt during the period t and the internal debt in the period t-1; $$pd_t$$ is the primary deficit of the government during the period t. We account for uncertainty by applying random shocks for each variable. These shocks are constructed...
Our Debt Sustainability Model uses the standard debt dynamic equation to generate forecasts for the Debt/GDP ratio throughout the next 10 years. Specifically, we use the following the equation: $$ d{t+1} =d{t}\biggl[(1-\alpha)\biggl(\frac{1+i{dt}}{(1+gt)(1+\pit)}\biggl) +(\alpha)\biggl(\frac{(1+\Delta\epsilont)(1+i{ft})}{(1+gt)(1+\pit)}\biggl)\biggl] + pdt $$ In which: $$d_{t+1}$$ is the ratio Debt/GDP for the t+1 period; $$\alpha$$ is the share of foreign debt in relation to total debt; $$g_t$$ is the real growth of GDP at the period t; $$\pi_t$$ is the variation of the GDP deflator for the period t; $$\Delta\epsilon_t$$ is the devaluation of the exchange rate between the local currency to the US dollar during the period t; $$i_{dt}$$ is the implicit interest rate for the domestic debt, it is calculated as the ratio between the interest paid for the internal debt during the period t and the internal debt in the period t-1; $$i_{ft}$$ is the implicit interest rate for the foreign debt, it is calculated as the ratio between the interest paid for the internal debt during the period t and the internal debt in the period t-1; $$pd_t$$ is the primary deficit of the government during the period t. We account for uncertainty by applying random shocks for each variable. These shocks are...
By Maia Mindel (mmindel@alphacast.io) Read more Alphacast Highlights here The Ecuadorian economy continues slow recovery from COVID. Given that the economy was already in a recession by 2019, Ecuador was hit particularly hard by the COVID pandemic - with a GDP contraction of 9% in 2020 and a slow recovery of 4% in 2021, with an even lower expected rate for 2022 - resulting in a similarly unimpressive labor market. Unlike most other countries, inflation in Ecuador has increased but not to extraordinary levels, resulting in a more beneficial real exchange rate. Perspectives remain muted, with slow but steady growth and no real changes in inflation, although the country's financial position may face complications in the future. The real economy and labor market show little room for improvement. Following a tepid performance in the years prior to the pandemic, the Ecuadorian economy has recovered slowly and moderately from the steep contraction it suffered in 2020. Real GDP remains more than 2% below pre-pandemic and pre-recession levels, with employment seeing a bumpy but progressive recovery. Given this, and the fact that both employment and output seemed stagnant over the previous decade, it is unlikely that growth takes off in Ecuador in...
By Maia Mindel (mmindel@alphacast.io) Read more Alphacast Highlights here Check out the coincident Consumption Index and the Investment Index What are Coincident Indexes? Argentina, as usual, is in the midst of economic turmoil, with two years of recession prior to the COVID pandemic at the end of a decade without any economic growth to speak of. It is widely agreed upon by politicians and experts, across parties, that boosting private investment is one of the key items to resolve these issues, although there is (naturally) widespread disagreement on how to accomplish this. At the same time, real personal consumption has suffered since the 2018-19 recession, and its recovery is a major concern for political and economic reasons alike. Consequently, being able to track fixed investment and private consumption data with higher frequency than the quarterly figures from INDEC's National Accounts publications is of great importance. We can do just that with a coincident index. A coincident index provides a gauge for the movement of a key economic variable through the use of related data series. In this case, the coincident investment index mirrors one the two largest components of GDP, Private Fixed Investment. Such an index tracks these variables relatively...
By Mariano Sanchez Moreno (msanchez@alphacast.io) Read more Alphacast Highlights here Repo captures investors' liquidity management. This asset-class choice to manage their liquid positions in local currency has intensified since the massive FCI outflows that ended in a sell-off in the yield curve of inflation-linked bonds (CER bonds) in Jun-22. Although repos are not unscathed by market ups and downs, as demonstranted by the increase in rates during the first trading days of the current Minister of Economy Sergio Massa's administration, their almost zero default risk, market depth and liquidity for short terms explain investors' preference. In light of this, 93% (ARS 160 bn on average) of the daily traded volume is invested in less than 3 days, which would indicate the strong preference of investors to stay in the short end of the ARS curve. The spread between bonds vs. Treasury bills means higher probability of sovereign default. In recent trading days, the average spread on fixed-rate bills and sureties was 25 p.p. Political volatility, the profile of short-term indexed debt and living ghosts of the reprofiling of local currency Treasury bills in Aug-19 are part of the yield spread as well. Unlike Treasury bills, where the investor's payment guarantee...
Despite the recent slowdown, Peru is recording one of the highest rates of growth in the last decade across LATAM, falling behind Colombia only. However, most of this growth happened before the pandemic. After the Covid-19 outbreak, Peru has been struggling to return to its pre-Covid growth trend. Regarding politics, the government of Pedro Castillo became a turning point: political paralysis has eroded the investment climate, and the ongoing political tumult has subdued the economic growth outlook. On the markets, a larger global economic slowdown would undoubtedly have negative reverberations on Peru’s copper returns and economy. Added to this, at the local level the lagged effect of monetary and fiscal adjustment, and lower consumption driven by lower disposable income stopped the activity, while the drop in business expectations may further affect the dynamics of investment. In addition, the Central Bank is not discarding further hikes of the interest rate if inflation is not lowered within the target range, which could affect the level of economic activity. On a positive note, Peruvian fiscal and external balances are good compared with other peers, sovereign ranking is still good (BBB), the debt level (34% of GDP), and interest burden (1.4%) are quite low....
Uruguay's economy had been growing very slowly and unevenly over the past decade, especially in the last 7 years - with growth averaging 1.3% over the past decade and 0.6% over the past six. The Uruguayan economy is expected to continue growing in 2022 and 2023, particularly due to a reopening of tourism. Inflation has stayed above target for most of the decade, although the recent deviation is both larger and more prolonged than previous ones. Politics are expected to remain stable, with the current government being relatively popular, and elections not being scheduled for another two years. Activity GDP is expected to grow 5.2% in 2022 and 3% in 2023. After a moderate recovery in 2021 (4.4%), output is expected to increase in the current year and during the next one, both due to a rebound after the pandemic, but also due to better expectations for economic conditions. Industrial production grew 5.4% MoM and 9.3% YoY in August, following a disappointing performance in July (-1% YoY, -1.8% MoM). The fastest growing sectors have been Rubber and Plastics (+31.5% YoY), Chemicals (+20% YoY), and Food (+11.9% YoY). Inflation Headline inflation accelerated in September, with prices growing 10% YoY and 0.8%...
Mexico has grown slowly in recent years, particularly since 2018. The Mexican economy hasd grown 1.2% on average in the last decade, but 0% in the last 5 years. In 2020, the country suffered its worst recession since the Great Depression, with GDP dropping 8.5% YoY - and the recovery was incomplete in 2021, with only 4.8% growth. The economy is expected to continue its recovery very slowly, with expectations in the 1-2% annual range for 2022 and 2023. This is due to the Mexican economy's close ties to US economic performance, a major difference from every other large Latin American country. Activity The economy is expected to grow 2% in 2022 and 1.2% in 2023. In August, Mexico's monthly GDP estimate rose 5.7% YoY and 1.4% MoM, surpassing July's figure of 1.7% YoY and -0.7% MoM. Growth was led by Manufacturing Industries (+8.1% YoY), Services (+6.6% YoY), and Retail (+6.2% YoY). Growth in 2022 can be explained as a result of the still-ongoing recovery from the 2020 recession. Inflation Headline inflation accelerated in August. Annual inflation was 8.7% YoY in August, higher than July's 8.2% YoY printing. All segments of inflation accelerated, with the more volatile Non-Core prices growing...
By Mariano Sanchez Moreno (msanchez@alphacast.io) Read more Alphacast Highlights here Crowding out skyrockets. The Treasury's need for financing, originated in sustained fiscal imbalances, leads the private sector to compete with the BCRA for scarce bank credit. That said, the Central Bank seeks to sterilize the inflationary impact of its monetary issuance. By the end of Sep-22, loans to the private sector represented 42% of deposits and 10% of GDP (vs. 76% and 11.4% in Dec-19, respectively). Likewise, the amount of pesos lent to the BCRA (ARS 7.97 tr) is outpacing private lending (ARS 6.4 tr) since May-21. This displacement of private credit by BCRA places corporate debt issuance as an alternative for firms to seek new forms of financing. Investors see value in corporate Energy sector. From the investor's perspective, corporate debt (ONs) provide the possibility to dollarize and reduce exposure to sovereign risk. Investors prioritized staying in the short end of the curve (MD<2) in Q3 and demanding corporate fixed income from the energy sector as a hedging asset-class. Among the ONs with better relative performance were Vista Oil 2024 (VSC3O 4.7% vs 5% 6-month ma), Pan American Energy 2027 (PNDCO 7% vs 5.6% 6-month ma), Capex 2024 (CAC2O...
The Colombian economy is still adapting to the political swing of the Petro Administration, the first left-wing president ever! The macro flashes multiple warnings, and consensus for 2023 points to deceleration to 2.3%. 75% of Colombia's global demand is explained by private consumption, the highest figure in the region, and consumption is posed to decelerate in the context of high inflation (11% Yoy Headline but 25% food) and real wage contraction. The country faces a large and risky twin deficit of the current (-6.2%) and Fiscal (-5.9%) accounts and the Gov. Interest payments account for as much as 3.9% of GDP. On the onset of a major political swing, the balance of risk for Colombia is looking negative. Activity Colombia is the fastest-growing economy in the region. It is expected to grow 6.0% in 2022, fueled by the growth of exports, remittances, and a positive fiscal shock pushed by the electoral cycle. Colombian Monthly GDP Estimate grew 1.4% MoM in August (vs. -0.3% in July) and is 8.6% above the previous year's level, mainly boosted by secondary sector activities, such as manufacturing and construction, with a 3.4% MoM rise. Inflation Moreover, Colombia is suffering from an elevated inflation rate, given...
Lula Da Silva will be the next president. Although he did not present a specific economic program during his campaign, he said he would focus his government plan on fighting indebtedness and inflation (mainly food, energy, and fuel prices). He aims to resume public investment in infrastructure and housing so as to promote sustainable and stable economic development. Unlike Bolsonaro, and with a markedly statist bias, Lula has even promised to use Petrobras as a vehicle for national development. On the other hand, a key point is a fiscal issue. He plans to repeal the spending cap required by the Constitution, which might be translated into a deeper fiscal deficit. The reaction of the markets will depend on Jair Bolsonaro's response to the results obtained and on the fiscal policy signals of the leader of the workers' party, as well as the appointment of his advisers. Brazil has been dealing with a stagnant economy for a decade. Nonetheless, this year is showing the best performance since the crisis of 2014, driven mainly by investment. In addition to the fact that unemployment hit a 7-year low, consumption growth accelerated in Q2 even though real wages fell (8%). Meanwhile, export growth was...
Chile was among the fast-growing economies before it was hit by political turmoil in 2019. Ten years' growth is 2.1%. It grew fast after the pandemic and is now 7% above, fueled by consumption financed by three partial withdrawals of pension savings. In 2022 It's the only economy in the region that is contracting and is expected to contract in 2023 and in terms of FX and inflation it was the worst performer of the year. The rejection of the constitutional amendment may lead to a more market-friendly proposition. However social unrest, violence in the south, volatile copper prices, and the government’s weak parliamentary position imply a highly uncertain scenario. Activity In 2023 GDP is expected to fall 1.0%. In August, Chile's Monthly GDP Estimate grew for the second time in the year, of 0.65% MoM, while in annual terms it remained without changes. This growth was pushed by the services sector (+1.9% MoM), offsetting the fall of the wholesale and retail trade (-2% MoM). The slowdown of activity in 2022 can be explained by the cease in the Covid-19 transfers and the lack of impulse that the withdrawals of pension savings gave to the economy the previous year. Inflation...
By Mariano Sanchez Moreno (msanchez@alphacast.io) Read more Alphacast Highlights here For those who follow Argentina's capital markets, this chart might be the most important one to track in the coming months. The green line is the forward rate of inflation-adjusted bonds (CER Boncer bonds), but maturing in Aug-23 and Mar-24. Between that time frame, the primary and general presidential elections will take place, which will define the political force that will form the next Administration. In this hands-on guide, we will show how to use Alphacast to do the math regarding forward rates. In this case, we want to know how much a new CER bond should yield (i.e. its IRR) in Aug-23 and maturing in Mar-24. To solve it, we will fetch our bond dataset (from IAMC), which has IRR, MD, parity, time to maturity, among other figures. Before any calculation, a quick look at the structure of the dataset (long format, top of the image) shows that the tickers are stacked one above the other. But to perform operations between bonds (rows), we need first to "unstack" the dataset, so that the prices/IRR/etc are in columns (wide format, bottom of the image). This kind of transformation does not...
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By Maia Mindel (mmindel@alphacast.io) Read more Alphacast Highlights here Inflation in Latin America, rapidly accelerated in 2021 and 2022 after the deflationary slowdown in 2020, as a result of both increased demand after stimulative monetary and fiscal policies, and of supply factors ranging from international shipping delays to a commodity price shock given the events in Eastern Europe. The region's highest inflation rate is Argentina's 78.5%, which follows the country's singular price dynamics and economic policies. Meanwhile, the rest of the region is experiencing high inflation rates, led by Chile's 14.1% YoY, Paraguay's 10.5%, Colombia's 10.2%, Brazil's 8.8%, Mexico's 8.7%, and Peru's 8.4%. Ecuador, which has adopted the US dollar as its currency, is experiencing a lower inflation rate of 3.8%, and Bolivian price growth has barely budged - to 1.6% a year even in the most inflationary global environment in half a century. Following this spike in price growth, the region's Central Banks have embarked on an aggressive tightening cycle, as in the rest of the world. In response to the newly inflationary global context, central banks have raised rates to their highest levels in years, and in some cases decades. This rapid tightening of financial conditions serves dual...
Global growth is slowing, USA demand has been dwindling for two quarters in a row, Europe is in the middle of a historical energy crisis, and China faces threats that leave "Chinese growth" years far in the past. Most analysts foresee further deceleration for 2023. What to expect for Latin America in this context? In terms of middle/long-term growth, Latin America can be split into three groups: The smaller-pacific-growing-countries: Colombia (3.0% 10 years average), Peru (2.8%), and Chile 2.1%, and the bigger-slow-or-no-growth Mexico (1.2%), Brazil (0.2%) and Argentina (0.2%). Uruguay (1.5%) stands in the middle. Smaller-pacific-growing-countries Colombia is the fastest-growing economy in the region. It is expected to grow 6.0% in 2022 and accumulates a strong 9.0% growth vs. the pre-pandemic levels. Colombia's growth this year has been fueled by the growth of exports, remittances, and a positive fiscal shock pushed by the electoral cycle. However, the Colombian economy is still adapting to the political swing of the Petro Administration, the first left-wing president ever! The macro flashes multiple warnings, and consensus for 2023 points to deceleration to 2.3%. 75% of Colombia's global demand is explained by private consumption, the highest figure in the region, and consumption is posed to...
By Maia Mindel (mmindel@alphacast.io) Read more Alphacast Highlights here Following global trends, inflation rapidly accelerated in 2022 in Latin America, as a result of expansionary fiscal and monetary policies to counteract the 2020 recession brought on by the COVID pandemic, disruptions to international supply chains, and recent geopolitical tensions, as well as political uncertainty in a large swathe of the region. Broadly, patterns in all countries are similar: after a depressed inflation rate during 2020, as a result of lower spending during the worst months of the pandemic, inflation began accelerating in the second half of 2021 and reached the highest levels in decades. This follows global trends, with price spillovers between countries being a possibility, as well as the effects of supply-side constraints last year, and of the War in Ukraine during the past seven months. Largely, inflation rates reflect a broad acceleration of the rate of price growth, rather than an increase in specific items (particularly food and energy), although it is clear that food inflation and global energy prices have contributed to the recent increases in cost of living. The combination of broad-based price increases with specific commodity market disruptions poses a significant challenge to policymakers. Argentina...
By Matías Carugati (matias@alphacast.io) Read more Alphacast Highlights here With the pandemic shock well behind, central Banks worldwide have been reacting to the inflation surge. The monetary policy tightening started early last year and has continued since. The number of central banks increasing their policy rate is even higher than in the previous cycle, just before the global financial crisis. Not surprising, considering that inflation has soared to numbers not seen in decades. Policy reaction in developed economies has been relatively recent, with most relevant central banks moving in 2022. Compared to previous tightening cycles, though, their reaction seems more abrupt. However, more action will likely be required. Policy rates are still below the levels they had before the global financial crisis, with inflation pressures not subsiding over the short term. Keeping the expectations well-anchored will require decisive action by central banks. Developing economies, and Latin American ones in particular, have moved with more emphasis. The tightening started sooner and was stronger than in developed economies. In part, because inflation rose to higher levels and expectations are not as well anchored. But also because the IT regime that most banks follow requires to maintain credibility. It is possible that monetary...
By Matías Carugati (matias@alphacast.io) Read more Alphacast Highlights here Argentina's government has sent the 2023 Budget Bill to Congress, but approval might not be a "walk in the park", particularly in the Upper House. With 118 seats in the Chamber of Deputies, the officialism is short 11 seats to reach simple majority and move the discussion to the Senate. In that chamber, the government's position is better, as it has 35 seats and would only require an extra ally to pass the bill. The political composition of Congress forces the government to negotiate part of its legislative agenda. This year's Budget Bill was not approved by Congress and Alberto Fernández is running the government without one, which is more than an administrative nuisance. The Budget Bill sets fiscal policy, provides some basic macro forecasts and is the legal authorization for funds to be distributed (and spent) by all branches of government. Even the IMF has included the approval of Budget Bills in its recent deal with Argentina. Negotiations between officialism and opposition will be needed if Alberto Fernández wants to have a Budget Law in his last year as President. See here detailed information about Argentina's National...
By Florencia Hernández (fhernandez@alphacast.io) Read more Alphacast Highlights here The war between Ukraine and Russia, the slowdown in the Chinese and US economies, the acceleration of inflation, and the economic recession in the US have hit the confidence of both consumers and entrepreneurs in developed countries. In Latin America, inflation in food and fuel plus political uncertainty overshadowed the dynamics of the Consumer Confidence Index (CCI). In addition, the Business Confidence Index (BCI) was affected by the rise in rates and by the political uncertainty derived from the bias towards leftist parties, which reflects a bleak picture going forward. Regarding the CCI, among the countries analyzed, Argentina shows to have exceeded the pre-pandemic values by 8%, despite having suffered a drop of the same magnitude compared to the previous year. In any case, this isn't an encouraging figure, considering that the latest data available (Sep-22) is 5% below the average of the last 5 years. For the remainder of the year, high inflation, loss of purchasing power, and political and economic uncertainty contribute to keeping consumers cautious. Mexico although it is slightly above the average of the last 5 years (39.7), accumulates four months of decline in the CCI and...
By Milagros Ricchini (mricchini@alphacast.io) Read more Alphacast Highlights here Having been strongly hit at the onset of the Pandemic, in 2022 the investment rate is recovering throughout the region The investment rate in Chile is 24% of GDP, the highest and most stable rate in the region. Surprisingly, during 2020 Chile investment was mildly affected in comparative terms, and is now above pre-pandemic levels, even despite recent years' hike in political uncertainty. Over the last year, investment grew 7.4% compared to 5.4% of GDP growth. Analyzing the last 10 years, Chile’s investment dynamics were positive compared to the region, accumulating a 15% growth, but negative compared to developed economies such as the United States, Euro Area, or the United Kingdom. Peru was strongly hit by Covid but has already recovered its investment rate, positioning as the highest of the region with a level of 26%. In the short run, investment growth is very modest with an annual growth rate of only 1.1% vs GDP’s 3.3%, signaling that investment isn’t nowadays a driver of Peru’s economic activity. Argentina is an unusual case. The country is showing a record-high investment rate, that is driven not by real investment opportunities but by the...
By Milagros Ricchini (mricchini@alphacast.io) Read more Alphacast Highlights here During 2020 and 2021, massive amounts of liquidity were injected by the Central Banks to moderate the impact of the crisis and help finance the fiscal cushions, but with the hike in worldwide inflation, this has already started to reverse. Colombia is the country in the region with the highest Monetary Base/GDP ratio, increasing 3 p.p. during the pandemic and currently reverted 2p.p. from that increase, while in terms of M2/GDP the increase during the pandemic reached 10 p.p. and is now 6 p.p. down from its highest point. Monetary Base and M2 have stabilized in real terms for some time, meaning that the contraction in terms of GDP is mostly explained by growth and not due to a fall in the aggregates. Mexico increased 3 p.p. the Monetary Base/GDP ratio during the pandemic and maintained that level since, and something similar happened to the M2 ratio, which increased by 6 p.p. during the pandemic and then remained stable in that place. Mexico ranks second in terms of money base/GDP and fourth in M2s, which means it doesn't have such a developed financial market as other countries in the region. Third...
By Mariano Sanchez Moreno (msanchez@alphacast.io) Read more Alphacast Highlights here in 2022, Brazil equity (EWZ, +21.9% YTD) has outperformed Latam (ILF, +15% YTD ) by 690 bps, driven by the market's favorable response to the recent presidential elections (+10.5% after elections). Its high Energy and Materials sector weighting allowed it to capture the gains of the commodity price rally during Q1-22 (DBC +22.3% QoQ), its long position in Financials is key in a rising interest rate environment. In hindsight, EWZ is at Aug-2016 values (post-Dilma Rousseff impeachment), but still trades 34.4% below its pre-pandemic peak. Also, Selling pressures from global fixed income markets (BNDX -12.7%, AGG -14.2%, EMB -23.8% YTD) are being more benevolent on Brazilian bonds (EMBI Brazil JPM Total Return Index -7.5% YTD). Its bond yields validate the timing (it was the first to raise rates in the region) and aggressiveness (PM rate at 13.75%, +1175bps since Mar-21) of its central bank, which has led to a slowdown in inflation (headline inflation Jul-22 -0.7% and Aug-22 -0.40% MoM). In late Sep-22, its risk premium trades at 308bps (-223bps vs Latam), +16bps vs the 2-year average, and -758 bps below the peak of Mar-20, during the initial stages of...
Much to analysts' and policy-makers chagrin, activity data often comes with substantial lags. Quarterly and/or monthly GDP reports reflect what happened in the recent past and they might not offer timely information about the present and future. Machine learning techniques allow researchers to fill that gap, by producing almost real-time estimates. One of such efforts is conducted by the OECD, which produces a weekly GDP growth tracker by applying a machine learning model to a panel of Google Trends data for 46 countries (see further information here). Check the OECD’s weekly growth tracker dataset here Global growth cooled down after the post-Covid 19 rebound. Central banks have been reacting to soaring inflation, with policy rates increasing worldwide. Not to mention that they have also started normalizing their balance sheets (the so-called "tapering"). It is not surprising that economic activity takes some hit, with spillovers everywhere. The first chart shows the simple average of OECD’s growth estimates for each country. Of course, any average hides heterogeneity. As expected, most developing economies are growing faster than developed ones (with the notable exception of Ukraine). However, dynamics seem pretty similar: a strong rebound, followed by some slowdown. Argentina, in particular, has suffered a...
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By Mariano Sanchez Moreno (msanchez@alphacast.io) See full interactive dashboard here By the end of 2021 and throughout the first half of 2022, inflation-linked bonds in dollars (Boncer index) remarkably outperformed local equity and hard-dollar bonds. Carry-trade profits suddenly faded away after the mid-June's Mutual fund melt-down. Signs of recovery came after BCRA started is QE program, which implied an estimated market intervention of ARS 1.1tr Until last June, Argentine bonds traded in line with emerging market or high credit risk bonds. However, the Mutual Fund crisis and the following political volatility deepened Argentina's risk perception, spreading the performance gap between its NY-law bonds (-29.3% YTD) and benchmarks ($EMB -19.5% YTD, JNK -12.9% YTD). Such local drivers were translated into a higher devaluation pressure of the Argentine peso (official FX +35.5% YTD, FX informal +37.4% YTD and BCS +40% YTD), contrary to the region (CLP +1.2% YTD, MXN -2.4% YTD and BRL -7.1% YTD). Not only does the BCRA seeks to suffocate this pressure by selling international reserves (net FX seller -72.4mn YTD) to defend the official FX rate, but also in FX futures markets (FX futures short position USD 7,072bn as of July). Upgrade to Alphacast Pro for $29 With...
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Other agro dashboards for Argentina: Macro - Mutual Funds - Fiscal This dashboard was created with Alphacast. Alphacast hosts hundreds of Datasets to keep track of commodity markets. Dashboards are updated every day with the most recent data. Click on any chart to make it interactive, and clip it to add it to your own dashboards. You can also create your own charts or use pipelines to transform the data. Feel free to reuse everything at will. Follow this simple guide - or video - to learn how to create a dashboard Market's performances FX-related charts Markets and Bond-Implicit rates Mutual Funds...
Alphacast hosts thousands of datasets, with global coverage. You can find an interactive dashboard with at least 30 charts to keep track of global monetary events. Our new Global Central Banks Dashboard allows an updated view of monetary policy in major central banks: Federal Reserve, ECB, Bank of England, Bank of Japan, and the People's Bank of China. Remember that you can copy and clone everything you see on this dashboard. Create your own charts or pipelines to transform the data, add your own format and colors, and brand. Feel free to reuse everything of your own will. Follow this simple guide - or video - to learn how to create a dashboard. Federal Reserve See further details about the Federal Reserve balance sheet here. European Central Bank See further details about the European Central Bank balance sheet here. Bank of Japan See further details about the Bank of Japan balance sheet here. People´s Bank of China See further details about the People’s Bank of China balance sheet here. Bank of England See further details about the Bank of England balance sheet...
Take a look at our Argentina Macro Dashboard as well This dashboard was created with Alphacast. Alphacast hosts hundreds of Datasets to keep track of commodity markets. Dashboards are updated every day with the most recent data. Click on any chart to make it interactive, and clip it to add it to your own dashboards. You can also create your own charts or use pipelines to transform the data. Feel free to reuse everything at will. Follow this simple guide - or video - to learn how to create a...
This dashboard was created with Alphacast. Alphacast hosts hundreds of Datasets to keep track of commodity markets. Dashboards are updated every day with the most recent data.. Click on any chart to make it interactive, and clip it to add it to your own dashboards. You can also create your own charts or use pipelines to transform the data. Feel free to reuse everything at will. Follow this simple guide - or video - to learn how to create a dashboard Other agro dashboards for Argentina: Soybeans - Wheat Corn Global Production (USDA) Local Production:...
This dashboard was created with Alphacast. Alphacast hosts hundreds of Datasets to keep track of commodity markets. Dashboards are updated every day with the most recent data.. Click on any chart to make it interactive, and clip it to add it to your own dashboards. You can also create your own charts or use pipelines to transform the data. Feel free to reuse everything at will. Follow this simple guide - or video - to learn how to create a dashboard Other agro dashboards for Argentina: Soybeans - Corn Wheat Global Production (USDA) Local Production:...
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This dashboard was created with Alphacast. Alphacast hosts hundreds of Datasets to keep track of commodity markets. Dashboards are updated every day with the most recent data.. Click on any chart to make it interactive, and clip it to add it to your own dashboards. You can also create your own charts or use pipelines to transform the data. Feel free to reuse everything at will. Follow this simple guide - or video - to learn how to create a dashboard Other agro dashboards for Argentina: Wheat - Corn Soybeans Global Production (USDA) Local Production:...
War and inflation have shifted the global economic outlook and the rising tides of global interest rates are adding pressure to emerging economies. Among them, Egypt is beginning to stand out due to large imbalances and high global financial cycle exposure. How much is the margin to avoid a balance of payments crisis in the near future? Egypt ranks at the top on typical macro imbalances ratios. They are, at the same time, in the top 20 ranks in terms of forecasted current account deficit for 2022 and in the top 10 in interest payment to GDP. External short-term debt has risen to 4.5% and reserves are already dwindling, and now cover 5 months of imports, 5 years low. On the other hand, while gross external debt still looks in the safe zone (25%), the overall public debt is almost 90% of GDP and yearly gross financing needs account for 30% of GDP. Since the onset of the war in February, Egyptian sovereign debt has been hit. The Yield Curve moved upward in line with global rates (about 300bp) but spreads vs the USA are hitting 4 years highs. So, Looking forward, the hindsight provided by Argentina's 2017-2018 crisis looks...
Despite the historical strong fundamentals, the combined effect of COVID, the Russia-Ukrainian War, and a visible shift in economic policy has cornered the Chilean economy into an atypical, unstable trend. Chile was strongly hit by the COVID lockdown in 2020. The economy saw a contraction of 15% at the peak of the crisis. The contraction was mild compared with its regional peers, and recovery was strong: current activity levels are about 8% above pre-COVID. However, most of this happened in 2021. For more than half a year now the economy looks stagnant. A surprising jobless recovery, like in many other countries around the globe. Unemployment levels are back on pre-COVID levels but with activity levels almost 3% below. After COVID about 5% of the people simply left the labor market. Chilean inflation has risen in line with increasing global energy and food prices, but Chile is ranking among the worst performers in the region (excluding of course Argentina). This has happened even though Chilean Central Bank turned hawkish and raised policy rates 7 times to 8,25%. Not enough, however, to stop real rates from turning negative to decades-low levels. External shocks explain most of the inflation acceleration but the pervasive...
