Inflation Pummels Latin America; Ecuador Receives Record Remittances

Bloomberg Línea — Inflation in Brazil, Chile and Mexico has surpassed expectations, with analysts saying that in the latter country, for example, the central bank will need to be more aggressive in raising interest rates to counter the price rises. And in Ecuador, migrants’ contribution to the economy is growing, with remittances setting a new record in 2021, totaling $4.36 billion, 30.7% more than in the previous year.

On the region’s stock markets, Argentina’s Merval index (MERVAL) once again had the best performance in the region, gaining 0.58% on Friday, while the Peruvian stock market saw the sharpest fall in the region, with the S&P BVL Peru (SPBLPGPT) down 1.57% at closing, while Mexico’s S&P BMV/IPC (MEXBOL) dropped 1.07% and Brazil’s Ibovespa (IBOV) dropped 0.45%.

Following is a roundup of Friday’s news from Bloomberg Línea and Bloomberg reporters across Latin America.

Argentina:

• Argentina will pay for the additional natural gas it will import this year from Bolivia at a price double that of 2021, the Energy Ministry informed Friday.
• Toyota Argentina has a new president, with the company unveiling Gustavo Salinas as the new CEO, replacing Daniel Herrero.

Brazil:

• Brazil’s inflation has risen above expectations, powered by hikes in fuel prices. Price rises exceeded all forecasts in March following national oil company Petrobras’s decision to increase fuel costs, adding to global inflationary pressures following the Russian invasion of Ukraine.

Chile:

• Monthly inflation again surprised the market in Chile, with the CPI for March up 1.9% month-on-month, an accumulated variation of 3.4% so far this year, and a 12-month increase of 9.4%.
• LarraínVial sees the Chilean peso falling to 850 per dollar by the end of the year.

Colombia:

• A new survey by the Centro Nacional de Consultoría confirms that two presidential candidates are shaping up to make it through to the second round: Leftist candidate Gustavo Petro, who remains in the first position of voting intentions with 34%, according to the latest polls, and right-winger Federico Gutiérrez, who has a voting intention of 23%.

Dominican Republic:

• The Caribbean country expects to capture $3.4 billion in foreign investment this year, compared to the $3.1 billion of 2021, an increase of 9.7%.

Ecuador:

• Migrants still sustain Ecuador’s economy, with remittances setting a new record in 2021, totaling $4.36 billion, 30.7% more than in the previous year.

Mexico:

• Analysts consulted by Bloomberg Línea agree that the central bank must be more aggressive in the face of escalating inflation. Inflation for March obliges the central bank to raise the interest rate by at least 50 basis points at its next meeting to 7%.

Panama:

• A citizens’ proposal has been tabled to shorten the working week from five to four days in the Central American country, as a response to high fuel prices, is beginning to stir debate in Panama. The initiative seeks to add two additional hours during the four-day week to total 40 hours, and add an additional day off, which could be Friday or Monday, which would translate into a 20% weekly reduction in fuel costs.

Peru:

• Analysts at S&P are not ruling out an exit scenario for President Pedro Castillo. Constanza Perez, senior analyst for Peru at S&P Global Ratings, told Bloomberg Línea that the persistent political stalemate in Peru is undermining efforts to maintain investor confidence in the country.