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Reuters
19-05-2025
- Business
- Reuters
Chile's economy grows more than expected in first quarter
SANTIAGO, May 19 (Reuters) - Chile's gross domestic product grew 0.7% in the first quarter of 2025 from the previous three-month period, central bank data showed on Monday. The result came in slightly above the 0.5% expansion expected by economists in a Reuters poll. The Andean nation's economy was up 2.3% in the first quarter from a year earlier, the central bank added, also above the 2.0% forecast in the Reuters poll. Trade, manufacturing, personal services, and agricultural activity were the main contributors to GDP growth, Chile's central bank said, while mining, financial services and construction registered declines. "Looking ahead, we expect growth to slow gradually over the coming quarters as the impact of temporary drivers fades and external conditions become less favorable," Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, said in a note to clients. The slowdown should not be a major worry, as leading indicators suggest that activity in Chile will remain relatively strong, Abadia added. The central bank also released on Monday a poll of analysts showing that they expect interest rates to be held at 5% at the bank's next monetary policy meeting in June.
Reuters
30-04-2025
- Business
- Reuters
Mexico avoids technical recession but economists see tough path ahead
April 30 (Reuters) - Mexico's economy performed better than expected in the first quarter of the year, preliminary data released by national statistics agency INEGI showed on Wednesday, although analysts continue to warn of a difficult path ahead. Latin America's second-largest economy grew 0.2% in the first quarter from the final three months of 2024, INEGI said. here. That outpaced market expectations in a Reuters poll for zero growth and also marked a rebound from a 0.6% fourth-quarter contraction, but economists continued to sound a cautious note in light of the trade shock generated by U.S. President Donald Trump's tariff threats. "The quarter-to-quarter gain helped the Mexican economy avoid a technical recession, but it does little to alter the weak trajectory," Pantheon Macroeconomics chief Latin America economist Andres Abadia said in a note to clients. He mentioned heightened domestic uncertainty, tight financial conditions and ongoing risks from the U.S. trade war, noting that leading indicators already point to a challenging outlook. Quarterly growth was driven mainly by an 8.1% expansion in the primary sector, which includes farming, fishing and mining. Secondary or manufacturing activities contracted 0.3% while services were unchanged. Compared with the same quarter a year earlier, the Mexican economy expanded 0.8% in the January-March period, the statistics agency said, also boosted by primary activities. Economists expected 0.6% year-on-year growth. Capital Economics emerging markets economist Kimberley Sperrfechter said the data, which suggests that Mexico headed into the second quarter with weak momentum, should reinforce the central bank's concerns about the health of the economy. "This should pave the way for another 50 basis point rate cut at Banxico's meeting next month," she said, which would represent the third such consecutive reduction, even as annual inflation ticked up in early April.
Reuters
18-03-2025
- Business
- Reuters
Chile's economy slows in Q4 but full-year growth beats estimates
SANTIAGO, March 18 (Reuters) - Chile's economy slowed in the fourth quarter of 2024 from the previous three months but gained steam compared to a year earlier and full-year growth exceeded official estimates, data released by the central bank showed on Tuesday. The figures were published ahead of a key interest rate-setting meeting on March 21 at which policymakers are widely expected to hold borrowing costs at 5.0%, as they call for caution amid sticky consumer price inflation. The world's largest copper producer saw gross domestic product rise 0.4% in the fourth quarter from the previous three-month period, the bank said, a touch below the 0.5% growth expected by economists in a Reuters poll. GDP growth slowed from the previous quarter's 1.5% expansion as mining activity shrank, but was partly offset by higher services and agricultural activity. "More timely monthly activity data suggest that the economy headed into 2025 with more momentum. This, combined with above-target inflation, means that the central bank is likely to stand pat on Friday," Kimberley Sperrfechter of Capital Economics said. On an annual basis, Chile's economy grew 4.0% in the fourth quarter, beating the Reuters poll forecast of 3.7% growth. Chile last year regained momentum after a weak 2023 on the back of interest rate cuts. The central bank in January paused an easing cycle amid inflationary concerns after delivering a total 625 basis points of cuts since July 2023. In 2024 as a whole, the Chilean economy expanded by 2.6%, boosted mainly by exports, with internal demand growing 1.3%. Full-year growth stood above the 2.3% the central bank had projected in December and marked an acceleration from the previous year's 0.5%, as well as the strongest expansion since the post-pandemic rebound in 2021. Pantheon Macroeconomics' chief Latin America economist Andres Abadia said that Chile ended the year on a solid footing as domestic demand showed resilience, adding that growth might accelerate this year on strong private consumption. "But risks remain tilted to the downside, given volatile external conditions and still-tight financial constraints, with policymakers having little room for maneuver in the near term." Chile's government last month forecast GDP to grow 2.5% this year, while average inflation was estimated at 4.7%, still above the official 2% to 4% target range.
Reuters
21-02-2025
- Business
- Reuters
Mexico economy contracts 0.6% in the fourth quarter as trade tensions loom
Feb 21 (Reuters) - Mexico's economy shrank in the fourth quarter for the first time in more three years, official data showed on Friday, as the central bank expects at best lackluster growth next year and economists see stiff risks ahead including trade tensions. Statistics agency INEGI estimated that gross domestic product (GDP) contracted 0.6% in the October-to-December period when compared to the previous quarter, matching market expectations in a Reuters poll. The data, marking the first drop on a sequential basis since the third quarter of 2021, confirmed preliminary data from INEGI last month that underscored ongoing challenges faced by Latin America's second-largest economy. Fourth-quarter GDP was dragged down by an 8.5% quarter-on-quarter decline in the economy's primary sector, which includes farming, fishing and mining. Secondary or manufacturing activities were down 1.5%, though services grew 0.2%. "These figures confirm that growth slowed in Q4 due to several headwinds, including tight financial conditions, heightened external risks, domestic uncertainty and bad weather," said Andres Abadia of Pantheon Macroeconomics. Slowing economic activity, coupled with cooling inflation, is seen helping drive borrowing costs lower in Mexico, where the benchmark interest rate stands at 9.50%. On Thursday, the central bank signaled it might continue cutting the rate at future meetings and could "consider adjusting it in similar magnitudes" to its most recent 50-basis- point reduction. "Lower interest rates, falling inflation and still-healthy real wages will prevent a prolonged contraction in the short term," noted Abadia. "The key threat remains the risk of a tariff war," he added, referring to threats from U.S. President Donald Trump to slap across-the-board duties on Mexican goods. The United States is by far Mexico's top trade partner. In annual terms, Mexico's economy expanded 0.5% in the fourth quarter compared to a year earlier. Growth in the full year reached 1.2%. The Bank of Mexico expects growth this year to slow to 0.6%. It halved its forecast this week and even sees a possibility it could slide into recession, contracting by as much as 0.2%.
Reuters
07-02-2025
- Business
- Reuters
Mexico inflation slows in January as central bank steps up rate cuts
Feb 7 (Reuters) - Mexico's annual inflation rate slowed slightly more than expected in January, official data showed on Friday, after the central bank accelerated the pace of its interest rate cuts and signaled more monetary easing ahead. In Latin America's largest economy, the headline annual inflation rate hit 3.59% in January, statistics agency INEGI said, down from 4.21% the previous month and just below the 3.61% expected by economists polled by Reuters. The improving inflation environment, with consumer price rises now within the Bank of Mexico's 2% to 4% target range, and an economic contraction reported late last year have allowed policymakers to reduce borrowing costs in the country. The central bank announced on Thursday a 50 basis-point cut to its benchmark interest rate to 9.5%, doubling the pace of its easing cycle and saying it could cut by a similar magnitude in future as inflation cools. "This is a good inflation report, supporting Banxico's dovish tilt yesterday," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said. "Inflation in Mexico hit cyclical lows recently, thanks in large part to subdued core pressures, giving Banxico some space to start normalizing monetary policy. But the Mexican peso sell-off in Q4 remains a near-term risk to price stability." In January alone, according to INEGI, consumer prices were up 0.29%, slowing from the 0.38% rise seen in December. Economists in the Reuters poll expected a 0.31% increase. The core index, which strips out some volatile food and energy prices, rose 0.41% during the month and 3.66% on an annual basis. Market forecasts were at 0.45% and 3.70%, respectively.
