Brazilian growth expectations increased for 2017-2019


GDP growth increased for the three years horizon. According to Focus survey, GDP growth increased by 2bps for 2017 and 2018, to 0.91% and 2.62%, respectively, and by 5bps for 2019 (now at 2.75%). IPCA inflation expectations declined 15bps to 2.88% for 2017, now below the lower bound of the target range (3.0%), and remained stable for 2018 (at 4.02%) and 2019 (at 4.25%). Year-end Selic expectations once again remained flat for the three years horizon, at 7.00% for 2017 and 2018, and 8.00% for 2019. The BRL also remained flat for the three years horizon: at 3.25/USD for 2017, at 3.30/USD for 2018 and at 3.37/USD for 2019.

Paper cardboard dispatches (ABPO) rose 0.2% mom/sa in November (our seasonal adjustment). The soft figure follows a 2.0% accumulated decline in September-October, leading the 3-month moving average to -0.6% (vs. -0.1% up to the previous month). The result is in line with other coincident indicators already released, signaling a weaker industrial production in 4Q17. Our preliminary forecast for November industrial production is a 0.7% mom/sa decline.

The BCB placed the full offering of 14,000 FX swaps. After closing, the central bank announced another roll over auction of up to 14,000 contracts (USD 700 million) on December 12. The BCB also announced the offering of another USD 2 billion FX credit line on December 12.

The Copom minutes will be released tomorrow at 8:00 AM (SP time). For now we stick with the view that the Copom will cut the Selic to 6.5%, in two 25bps increments, in February and March, rather than in a single 50bps move. But we reckon that absence of progress on the fiscal adjustment and reform agenda would make the second 25bps cut less likely, and hence increase the likelihood that the cycle ends with the Selic at 6.75%. Additionally, the Systematic Survey of Agricultural Production for November, from IBGE, will be released tomorrow at 9:00 AM (SP time).


The central bank of Argentina will hold its biweekly monetary policy meeting to decide on the reference rate tomorrow. We expect a 100-bp increase in the repo rate to 29.75%, as the central bank aims to reduce inflation expectations in the run-up to the wage negotiation season. However, we think a hike is more likely in the second meeting of the month. Moreover, the INDEC (the official statistical agency) will publish the National CPI for November. We expect it to post a 1.4% mom increase, in line with estimates.


The statistics institute (INEGI) will publish October’s industrial production tomorrow at 12:00 PM (SP time). We estimate that industrial production grew 1% yoy (Bloomberg market consensus: 0.7%), considering better coincident data.

Mexico’s supermarket & department store (ANTAD) same-store-sales accelerated in November, amid firmer growth of the real wage bill and a sustained improvement of consumer confidence. ANTAD sales expanded 5.4% yoy in November, in between our forecast (4.5%) and median market expectations (5.6%, as per Bloomberg). With this result, the three-month moving average growth rate picked up to 4.4% yoy (from 3.9% in October). Importantly, the real wage bill (that is, employment multiplied by average wage, and adjusted for inflation) has been showing stronger momentum, with seasonally-adjusted quarter-over-quarter annualized growth increasing to 4.4% in November (from 3.7% qoq/saar in October and an average growth rate of 2.5% qoq/saar in the first nine months of the year). All-in, we believe the positive drivers (falling inflation, formal employment growth, improving consumer confidence and solid remittances) for consumption will outweigh the negative (slowdown in consumer credit) in the coming quarters. So we see an acceleration of ANTAD sales on the horizon.

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Fuente: ITAU

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