http://www.latinamericamonitor.com Latin America Monitor RSS Feed from Business Monitor International en Copyright 2009, Business Monitor International Ltd Fri, 03 Jul 2009 06:30 GMT Fri, 03 Jul 2009 06:30 GMT AFP RSS Generator As we had suspected, the Puerto Rican government's latest round of public sector job cuts has provoked massive island-wide public unrest. The largest demonstration took place in the capital, San Juan, with 100,000 protesters - including union members and opposition parties - attacking the policies of recently elected Governor Luis Fortuño. Faced with a gaping fiscal deficit, the government has been forced to slash the public payroll to the tune of 30,000. However with the public sector representing the largest employer of workers on the island, we can expect more demonstrations - and possibly more serious unrest - in the http://www.latinamericamonitor.com/file/79085/San-Juan-Is-Not-Amused.html Thu, 02 Jul 2009 00:00 GMT BMI View: With luxury and residential home sales continuing to plunge, Puerto Rico's property market is showing little sign of gaining traction, and we expect more pain to be in store in H209. Unfortunately until the island's real estate sector stabilises, the prospects for a broad-based economic recovery remain slim, in our view. http://www.latinamericamonitor.com/file/79083/Property-Market-In-A-Real-State.html Thu, 02 Jul 2009 00:00 GMT The Central Bank of Trinidad & Tobago (CBTT) cut the country's repo rate by 50bps to 7.50% in June, bringing cumulative monetary easing to 125bps since March. The move came on the back of a positive inflation surprise, with the retail price index showing month-on-month contraction of 0.2% in May (taking the year-on-year rate down to 10.3%, from 11.9% in April). We still see scope for another 50bps cut before the easing cycle comes to a halt. Meanwhile, deflationary trends should kick in the second half of the year, suggesting to us that headline inflation could fall towards our out-of-consensus end-2009 target of 4.0%. http://www.latinamericamonitor.com/file/79084/Macroeconomic-Forecast-Trinidad-Tobago.html Thu, 02 Jul 2009 00:00 GMT Rio de Janeiro State Governor Sergio Cabral announced that China's state development bank is planning to open a branch in Brazil's oil and gas capital, where Brazil's state energy giant Petrobras is based. The announcement follows an agreement by the China Development Bank Corp. to lend US$10bn to Petrobras back in May, to help fund offshore exploration projects. We believe this move highlights China's growing interest in Brazil's energy resources, and a desire to benefit from technological spill over in oil servicing and exploration, along with recent forays into oil producing countries to secure strategic future energy supplies. http://www.latinamericamonitor.com/file/79080/China-Development-Bank-Sets-Up-Shop-In-Rio.html Thu, 02 Jul 2009 00:00 GMT Brazilian industrial output continued to contract on a year-on-year (y-o-y) basis for the seventh month running in May, falling by 11.3%, and 9.9% seasonally adjusted. Although still distinctly negative, the rate of contraction marks an improvement on the April figure (-12.2% y-o-y seasonally adjusted), and the peak contraction of 15.7% y-o-y in December 2008. This underpins our view that the rapid rate of deterioration in the Brazilian economy has peaked in at the early stages of 2009, and is already starting to show signs of early improvement. Although the economy may have bottomed out, we caution against premature optimism, as industrial output remains in firmly negative territory. http://www.latinamericamonitor.com/file/79081/Macroeconomic-Forecast-Brazil.html Thu, 02 Jul 2009 00:00 GMT Prime Minister Patrick Manning has reiterated his support for Trinidad and Tobago's entry into an economic and political union with the Organisation of Eastern Caribbean States (OECS). According to Manning, the economic problems confronting the Eastern Caribbean pose a threat to the economic and well-being of the twin-island republic. Trinidad and Tobago, along with St Lucia, Grenada and St Vincent and the Grenadines, have indicated their willingness to form a union by 2013. However, other Caribbean countries (most vocally Jamaica) have said that such a scenario would jeopardise the long-term aims of the Caribbean Community (CARICOM). http://www.latinamericamonitor.com/file/79082/Pipeline-Project-Announced.html Thu, 02 Jul 2009 00:00 GMT With a recent poll suggesting the governing Partido Acción Nacional (PAN) has failed to make up substantial ground on the opposition Partido Revolucionario Institucional (PRI), it now looks almost certain that President Felipe Calderón's congressional support base will be severely eroded after July's mid-terms elections. The recent poll, carried out by Berumen y Asociados / El Universal showed that while support for the PAN had dropped less than for the PRI between May and June, by 1.0 percentage point (pp) compared to the PRI's 1.4pp fall, there is still a wide gap between support for the two parties - 35.8% for the PAN compared to 43.3% for the PRI. http://www.latinamericamonitor.com/file/79079/Calderon-To-Lose-Congressional-Support-Base.html Thu, 02 Jul 2009 00:00 GMT According to IMF statistics, Mexico's foreign reserves (excluding gold) fell to US$84.0bn in April, a 9.4% year-on-year (y-o-y) fall, significantly greater than March's 6.1% y-o-y drop. Nevertheless, actual reserve levels fell less in April than in the previous month, down only US$1.4bn compared to US$4.5bn in March, suggesting that reserves are finding some relief from a rapid contraction in imports and relative currency stability. As a result of this more moderate fall we have revised up our end-2009 foreign reserve projections to US$75bn from our previous US$65bn forecast. http://www.latinamericamonitor.com/file/79078/Macroeconomic-Forecast-Mexico.html Thu, 02 Jul 2009 00:00 GMT On June 17 the Mexican navy announced the seizure of more than one tonne of cocaine hidden inside the carcasses of frozen sharks, an indication of the lengths the cartels will go to smuggle drugs across the US-Mexico border. The high-profile seizure follows the announcement earlier in June that the US is now looking to do more about the flow of arms and money south of the border, as well as the entry of drugs into the country, a move which will certainly be welcomed by the Mexican authorities who have long highlighted that the problems are due to failures on both sides of the border. http://www.latinamericamonitor.com/file/79077/Economic-Activity-Suggests-Q209-Worse.html Thu, 02 Jul 2009 00:00 GMT BMI View: With the twin current and fiscal account deficits likely to maintain downward pressure on Barbadian reserve levels over the medium term, and the recent credit downgrade making any resort to global credit markets less attractive, we are becoming increasingly concerned about Barbados' credit outlook over the medium term. http://www.latinamericamonitor.com/file/79036/Credit-Outlook-To-Suffer-Further.html Wed, 01 Jul 2009 00:00 GMT Brazil's consumer confidence index, as measured by the Fundação Getulio Vargas institute, has made an astonishing comeback in the second quarter of the year, bouncing from 97.6 in April to 106.4 in June. This takes consumer confidence in Brazil firmly above the key 100 mark, suggesting growing optimism among households on future economic conditions. The index fell below 100 in November for the first time since the survey began in September 2005, only briefly pushing above this level in December. We believe that this is a significant development, further underpinning our view that the recovery phase of the Brazilian economy may already be well underway, with private consumption demonstrating remarkable resilience during the first quarter of 2009. We are holding to our projection for a 0.6% real contraction of the economy this year, and expect the economy to bounce back strongly in 2010 to 2.0% growth. http://www.latinamericamonitor.com/file/79034/Consumer-Confidence-Makes-A-Comeback.html Wed, 01 Jul 2009 00:00 GMT BMI View: Until the fall in remittances starts to stabilise, it is extremely unlikely that the El Salvadoran consumer will be able to mount a meaningful recovery, such is the importance of these inflows in driving household spending. Coupled with a rise in local unemployment, we believe that private consumption will remain a major drag on headline growth in H209. http://www.latinamericamonitor.com/file/79035/Consumer-To-Remain-In-Bad-Shape.html Wed, 01 Jul 2009 00:00 GMT Government pressure to reduce borrowing costs seems to have succeeded in sending average lending rates significantly lower. However, at a time of rising private sector delinquencies and increasing requests for bankruptcy filings, we continue to caution that an uptick in non-performing loans could threaten the profitability of the entire banking sector for years to come. http://www.latinamericamonitor.com/file/78990/Banking-Sector-Outlook:-Bumpy-Road-Ahead.html Tue, 30 Jun 2009 00:00 GMT President Cristina Fernández and her ruling Frente para Victoria bloc have suffered defeat in last Sunday's mid-term elections, in which the ruling coalition lost its majority in both houses of congress. Although we caution that this could lead to an increase in public spending to boost the party's popularity ahead of the 2011 presidential election, we see this development as a positive step for Argentina's long-term economic outlook, as it should put an end to the government's grip on the private sector. http://www.latinamericamonitor.com/file/78950/The-End-Of-Kirchnerismo.html Mon, 29 Jun 2009 00:00 GMT The Paraguayan authorities are reportedly planning on selling their first international bond in an effort to deepen local financial markets and encourage investment in the country. We believe that this is a significant development for the Paraguayan economy and financial system, which, together with the continuation of prudent macroeconomic policies, should help the country to achieve robust economic growth rates over the medium term. http://www.latinamericamonitor.com/file/78907/Macroeconomic-Forecast-Paraguay.html Fri, 26 Jun 2009 00:00 GMT