Week Ahead: Prints To Show Weaker Economic Activity In Latin America In February 2022

• Fitch Solutions will be monitoring February economic activity prints for Argentina, Brazil, and Colombia for an indication of the strength of the region’s economy prior to the economic shock caused by Russia’s invasion of Ukraine on February 24. 
• Growth in these markets steadily slowed over H2 2021 and into 2022, as in much of the rest of Latin America. In January, activity contracted in seasonally-adjusted month-on-month terms in each market, while also slowing sharply in year-on-year terms as base effects became less favourable. 
• Activity in Brazil is expected to be higher in February than in January (-1.9% y-o-y and 0.8% m-o-m). This view reflects high-frequency data which generally showed an improvement in the second month of the year. However, it is forecasted that Brazil will see only 0.7% real GDP growth in 2022, given high inflation and significant political uncertainty. 
• After Mexico’s inflation came in above expectations in the second half of March at 7.62% y-o-y (0.59% m-o-m), reflecting the impact of higher commodity prices, Fitch expects inflation will remain comfortably above 7.00% in the first half of April. However, core inflation, which reached 6.88% in the second half of March, is also likely to continue climbing, adding more pressure on the Banco de México to hike from 6.50% in the months ahead.

(Source: Fitch Solutions)