Latin America News
LAST UPDATE: June 12, 2025
Mexican financial system resilient despite risks, says cenbank
In its biannual report, Mexico’s central bank affirm that the financial system remains robust with solid liquidity and capital, capable of withstanding adverse economic scenarios amid global uncertainty.
Insight
Despite inflation above target and U.S.–China tensions, Mexico’s banking oversight and stress-testing have maintained stability, suggesting deep structural strength though external risks persist.
Mexican Industrial Production Edges Up in April
Mexico’s industrial output grew modestly in April, with a 0.7% increase in manufacturing—particularly computers and electronics—offsetting declines in other sectors like automotive.
Insight
The mixed results point to a strategic shift in Mexico’s export basket: tech and electronics are emerging bright spots, yet auto sector weakness signals vulnerability to U.S. tariffs and global supply chain strains.
Mexico’s central bank may pause rate cuts, deputy governor Heath says
Deputy Governor Jonathan Heath remarked that Banxico might temporarily halt its benchmark rate reductions after May’s inflation rebound above target, though a 50‑bp cut is still expected in June.
Insight
Heath’s cautious tone suggests a data-dependent policy outlook, balancing the need to support growth with managing inflation expectations—signaling potential deceleration in easing.
US pushes Mexico to prosecute politicians with ties to drug cartels
The Trump administration, spearheaded by Secretary Rubio, is urging Mexico to investigate and charge politicians—particularly from the Morena party—for ties to organized crime, with threats of tariffs and extraditions if progress stalls (reuters.com).
Insight
This marks a significant intensification of anti-corruption pressure from the U.S., risking backlash in Mexico as it may derail diplomatic relations and spark domestic political turmoil, particularly within the Morena-led government.
Brazil to spare individual tax breaks in fiscal package, sources say
Brazil’s Finance Ministry will exclude current individual income tax deductions—such as health, education, and retiree exemptions—from its upcoming fiscal reform, instead targeting corporate and financial investment tax breaks to improve budget balance .
Insight
Preserving individual tax perks shows political prudence by shielding middle- and lower-income taxpayers, while reforming investment taxation may streamline the system—though the emphasis on revenue could still stir congressional debate.
Brazil’s finance minister urges lawmakers to back economic agenda
Finance Minister Haddad urged Brazil’s Chamber of Deputies to approve economic reforms aimed at securing sustainable 3% GDP growth, proposing private credit and betting tax hikes to replace prior financial transactions levies .
Insight
Haddad is signaling a willingness to broaden revenue sources and enact structural reforms—yet his reliance on tax increases, without addressing spending, could face pushback from legislators prioritizing fiscal consolidation.
Colombia considers boosting debt to cover growing fiscal deficit, sources say
Colombia is considering increasing both domestic and external borrowing in 2025 to address a growing fiscal deficit. Plans include issuing $2.4 billion in external bonds and $1 billion in bank loans, along with raising domestic bond issuance from COP 46.5 trillion to COP 58 trillion. The fiscal rule has been suspended, raising the deficit target from 5.1% to 7.1% of GDP.
Insight
This reflects Colombia’s strategic move to fund its deficit through borrowing, which may raise concerns about fiscal sustainability and investor confidence, especially given recent credit downgrades. Long-term solutions will require careful balancing of spending and revenue generation.
