- Economic slowdown in Argentina, Chile and Peru
- Job creation reduces the unemployment rates in Chile and Colombia
- Argentina frees wheat sales abroad
- November inflation provides an upward surprise in Peru
- In Brazil the government acts to avoid a forced landing
- Brazil cuts its reference rate and Chile leaves the door open to this possibility
In Argentina, industrial output fell in October by 0.3% m/m due to problems in the chemicals and textile sectors, although it was up by 4.1% y/y. In Chile, industrial output provided a major downward surprise when it fell 3.2% m/m and 0.8% y/y. In Peru, GDP in 3Q11 confirmed the economic slowdown with growth of 1.0% q/q and 6.5% y/y in 3Q11 (2Q11: 1.2% q/q and 6.6% y/y), boosted basically by consumption.
The unemployment rates in Chile and Colombia fell by 0.4 pp in the moving quarter Aug-Oct to 7.2% and 1 pp (October) over the last 12 months to 10.2%. This fall is the result of faster job creation (3.5% y/y in Chile and 6.6% in Colombia), above the growth rate in the labor force (3.1% y/y in Chile and 5.4% y/y in Colombia. There was a significant salaried component in job creation in both countries.
The government authorized more wheat exports of 2.7 million tons, amounting to around USD 600 million. Combined with the positive surprise in the October trade deficit, this should increase the trade surplus in 2011 to USD 10.6 billion (previous forecast USD 8.2 billion).
November inflation was 0.43%, higher than the expected 0.30%. As a result, the year-on-year inflation rate hit a high for the year of 4.6%. Once more, the result for the month reflected the impact of supply shocks, which have affected the prices of locally produced foods.
The government announced today a series of tax reductions to prevent the economy from slowing down too sharply. The GDP should not grow more than 0.2% q/q in the third quarter after growing by around 1.0% q/q in the first two quarters. The measures announced could lead to a slight recovery in growth in the fourth quarter.
Brazil cuts its reference rate and Chile leaves the door open to this possibility
In its last meeting of the year, the Central Bank of Brazil decided to cut the reference rate by 50 bps for the third time in a row. The markets expects at least two more cuts of 50 points at the start of 2012. In Chile, the minutes of the monetary policy meeting in November reflected that the Central Bank was better disposed towards the idea of preventive cuts. However, it is estimated that the strength of domestic demand and inflation will lead to a continued monetary pause in the December meeting.
Source: BBVA, INE, Bloomberg,