Weekly Highlights

The release of activity indicators in Peru and Colombia reinforces the recovery trend in the region. In Mexico, the inflation expanded more than expected due to the fiscal program. The deficit in the current account continued to increase in Brazil in consequence of the economic dynamism. In Argentina, there are limited advances in the decision regarding the Central Bank Governor. In Venezuela the government intervened in other three banks.

Argentina

  • Primary Surplus of the nonfinancial Public Sector reached $ 5.100 Millions. This result includes the accounting in December of $ 12.500 Millions of one-time income from capitalization by the IMF through Special Drawing Rights and revenues profitability of the Sustainability Fund previously held by Private Pension Funds.
  • Moreover, this week the Argentinean President authorized a parliamentarian meeting needed to provide institutional foundation to the removal of the Central Bank Governor. It is estimated that the commission will take at least a month to be issued.
  • Finally, it was released the official economic activity indicator (Monthly Economic Activity Estimator) of November, that grew by 0.5% seasonally adjusted with respect to October and 0.5% accumulated in the first eleven months of 2009.

Brazil

    • Total credit expanded 1.6% m/m (14.9% y/y) in December. NPL’s, on the other hand, dropped for the first time since the beginning of the crisis and reached 4.4% in December.
    • The current account deficit continue to increase in the last month of the year and closed 2009 at USD -24.3 billions (-1.55% of the GDP). The surplus of USD 70.5 billions in the capital account, however, was more than enough to finance this deficit.
    • The net job creation was negative (-415,192) in December due to seasonal reasons. The figure was worse than expected by the markets.

    Chile

      • The Ministry of Finance issued the first bonds in the local market. The amounts traded reached US$ 105 million for 10-year indexed bond at an auction rate of 3.3%, and US$ 125 million for local currency bonds at a rate of 6.5%. The issuance was over subscribed, which resulted in moderate upward adjustment in the rates associated with Central Bank bonds at the time of the announcement of the issue. The next issuance is scheduled for Jan. 27, including bonds with maturities of 5, 20 and 30 years for a total of approximately U.S. $ 275 million.
      • Key law on the regulation of salmon farming sector is delayed until March due to rejection in the House of Representatives. This most likely will result in postponed investment decisions in a sector that has already been strongly affected both by the ISA virus and a sluggish external demand.

      Colombia

        • In November, industrial production revealed the first positive growth since July of 2008 (2.0% yoy). Moreover, a sixth straight monthly increase appears when seasonally adjusted.
        • Retail sales increased 2.0% in November compared to the same period in 2008, reflecting an improvement in the household consumption.
        • Exports during November expanded 25.9% yoy. This growth can be explained by the higher exported volumes and the upturn of international prices for traditional goods.

        Mexico

        • January’s bi-weekly inflation rose 0.75% mom and 4.2% yoy (Dec-09: 3.6% yoy), first prices acceleration since last May. Core inflation rose 0.42% mom and 4.6% yoy. The triggers of this movement are new policy on public prices (gasoline), tax changes (VAT increase) and pressures from processed food prices. We expect that fiscal policy will be the main inflationary driver in 2010. December’s trade Balance was -248MD. Exports grew 22.8% and imports 11.7%, marking the beginning of the recovery of the external sector. Next week November’s IGAE will be published, we expect it to grow mom driven by industrial production.

        Peru

          • GDP grew by 4.2% y/y in November (0.8% y/y in October), the highest rate of the year. The monthly result was mainly explained by Services sector (8.7% y/y), especially Governmental Services (25.7% y/y), and Construction (13.8% y/y). The November figure confirms that the recovery of economic activity has been consolidating.
          • In December, local cement dispatches expanded by 11.5% y/y (11.6% y/y in November), suggesting that the construction sector has maintained an important expansion in this month.

          Venezuela

            • Sudeban intervened in three small banks. By decision of Superintendency of Banks were closed Banco del Sol-Development Bank, InverUnion-Commercial Bank and Mi Casa-Saving Bank, which represented 3% of total deposit. The resolution indicates that administrative and management problems drove to iliquidity situation that required the authorities` intervention.
            • Unemployment rate closed the year at 6.6%, figure 60 bp greater than the registered in December. By this ways, unemployment showed the eighth monthly increases in a row.