Sovereign Credit Insights LatAm Edition
May Spotlight: Update on Brazil, Colombia, Mexico, Costa Rica and USA
- How is inflation expected to be affected as Brazil´s Central Bank is reaching the end of their tightening cycle.
- Policy changes expected as an outcome of the Colombia elections.
- What are Mexico´s economic growth expectations.
- How the recent cyber attack on Costa Rica’s government crippled key digital services such as tax collection.
- How is the FED managing inflationary challenges in USA while preventing a hard landing.
This month´s sovereign highlights include:
- Brazil: The Central Bank is close to reaching the end of their tightening cycle, with inflation expected to peak in the coming months. It began tightening earlier than peers in the region.
- Colombia: Regardless of the outcome of the elections, we expect the country's political and economic institutions will provide a strong counter weight to radical policy changes. However, if new policies lead to a negative investment shock, then both growth and the fiscal profile will deteriorate.
- Mexico: Strong first quarter raises our expectations for full year growth to 1.8% , as exports to US increase. However, inflationary pressures will remain a key headwind to stronger economic growth.
- Costa Rica: The recent cyber attack on Costa Rica’s government crippled key digital services such as tax collection, and highlights the increasing risks and impacts of cyber attacks that governments now face.
- USA: The FED will have difficulty managing inflationary challenges while preventing a hard landing, however we expect lower growth rather than a recession this year. A combination of headwinds have caused us to lower growth forecasts to 2.8% in 2022, from 3.7% previously.
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