Report8 January 2018Updated 2 weeks ago

LATAM: Political risk calls for caution

Presidential elections are scheduled in Mexico, Brazil and Colombia this year. We take a look at what the rise in political uncertainty means for economic policy and currency trading in the region

Executive summary
  • Rise in political uncertainty, with competitive presidential elections scheduled for Mexico, Brazil and Colombia, should intensify FX volatility in 2018.
  • A stronger macro footing, with robust external accounts, lower inflation and faster GDP growth, suggest a more contained FX weakening bias however.
  • Election polls (and NAFTA news) should drive the BRL and MXN performance, while our constructive outlook for commodities suggests a more resilient CLP and PEN.

This report is part of our 2018 FX outlook published December 2017