外文报告：BNP-Daily Latin America Spotlight-120928

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Emerging Market Research
Marcelo Carvalho 5511 3841 3418 Nader Nazmi 1 212 471 8216 Florencia Vazquez 5411 4875 4363 Gustavo Arruda 5511 3841 3466
Marcelo.carvalho@http://wendang.chazidian.com nader.nazmi@http://wendang.chazidian.com Florencia.vazquez@http://wendang.chazidian.com Gustavo.arruda@http://wendang.chazidian.com


Market Economics Friday, 28 September 2012
Daily Latin America Spotlight
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Key Event
Brazil: Inflation report – A rosy outlook.

Mexico: Manufacturing employment weakens.

Colombia: The market is pricing a 25bp rate cut today. We see a pause, more likely.

Chile: Higher manufacturing production and retail sales growth expected.

Argentina: The July monthly GDP proxy will likely show acceleration today.

Peru: Minister Castilla expects rapid public sector investment in Q4 and in 2012.


BRAZIL
The inflation report brought a rosy outlook, as we expected. Official
predictions normally forecast growth smoothly converging towards trend,
and inflation nicely converging towards target. This time was not different.
The central bank sees inflation below 5% in 2013, and growth close to 4%.
The central bank revised down this year’s growth forecast to 1.6%, in
line with consensus expectations. This forecast implies Q3 growth close
to 6% q/q annualised growth and 4%q/q annualised growth in Q4. In fact, BC
expects GDP growth running at an annualized pace near to the magic trend-
like number of 4% from Q4 2012 until Q2 2013. On inflation, the central bank
revised up its 2012 forecast to 5.2% from 4.7% this year, thanks to food
prices.
There is an interesting story for next year's inflation, though. The
central bank incorporated energy price cuts as expected. However, the
inflation projection did not fall much. Energy prices contributed to ease
inflation about 0.50pp; however, next year's inflation fell only to 4.8% from
4.9%. Market price inflation explains this difference. The central bank
revised up their market price forecast to 5.7% from 5.2% in the Q2 report.
We believe both regulated price and market price inflation will be much
higher than the central bank expects. In fact, we see inflation breaching the
6.5% tolerance ceiling in 2013.
Major Data Releases and Events
Country Indicator Last BNP Paribas
Argentina Construction Activity m/m: Aug 1.60%
Construction Activity y/y: Aug -0.60% -12.0%
Economic Activity Index m/m : Jul 1.10%
Economic Activity Index y/y : Jul 0.00% 1.50%

Brazil Manufacturing PPI m/m : Sep 0.54%
Manufacturing PPI y/y : Sep 7.19%
Fiscal Policy Report : Aug 34.90% 34.70%

Chile Manufacturing Index : Aug 0.60% 1.2%
Unemployment Rate : Aug 6.50% 6.60%
Copper Production Total (tons): Aug 414k
Retail Sales y/y: Aug 7.90% 8.60%

Colombia National Unemployment Rate: Aug 10.90%
Urban Unemployment Rate: Aug 11.50%
Overnight Lending Rate 4.75% 4.75%

Mexico Budget Balance YTD: Aug MXN-201bn

Venezuela Venezuela Crude Oil Basket

For 2012, the central bank
revised down growth, but
revised inflation up again
Next year, inflation will be much
higher than central bank’s
expectation