Bladex Weekly LatAm Insight

Economic Studies Department

_{Sergio Olarte | Gustavo Acero}

Our Weekly LatAm Insights, prepared by Bladex’s Economic Studies team, provide a weekly overview of the main macroeconomic developments in Latin America and the international environment, highlighting trends that may impact the region’s economic performance.

Key Takeaways of the Week

• Inflation and monetary policy were key themes this week. Price pressures are becoming increasingly relevant in El Salvador, Mexico, Colombia, and Peru, prompting the latter to raise its policy rate to 4.50%. Meanwhile, Brazil held the Selic rate at 13.75% amid elevated inflation expectations. By contrast, inflation moderated in Guatemala. These developments underscore that inflation convergence remains uneven across the region, limiting the scope for broad-based monetary easing.
• Fiscal risks coexist with positive signals from economic activity and financing conditions. Brazil and Colombia face more significant fiscal consolidation challenges, while Mexico is pursuing a gradual adjustment. At the same time, economic activity remains expansionary in Panama and Costa Rica, Peru recorded strong demand for its international bond issuance, and Suriname received a credit rating upgrade. Country-specific risks persist, particularly those associated with the Panama Canal and Ueno Bank in Paraguay.
• Inflation and geopolitical developments are driving higher global volatility. U.S. inflation surprised to the upside, reinforcing expectations of further Federal Reserve rate hikes, with markets pricing in virtually a full 25-basis-point increase in December. Meanwhile, mixed signals from Washington reduced the risk of an immediate escalation with Iran but left geopolitical uncertainty and oil-price volatility elevated, with Brent crude trading at around US$95 per barrel.

Read the full report here: Bladex Weekly LatAm Insight