Latin America News
LAST UPDATE: June 27, 2025
IMF pleased with Jamaica’s economic performance
The IMF concluded its 2025 Article IV review on June 12, 2025, praising Jamaica’s macroeconomic reforms, fiscal discipline, declining public debt, low unemployment (3.7% in January), and inflation stabilization within the 4–6% target.
Insight
Jamaica’s gains—anchored by strong institutions, fiscal responsibility, and resilience to shocks—serve as a model for other small, high-debt nations aiming for sustainable growth and stability. Continued vigilance is needed against global financial risks and climate-related disruptions.
Bank of Mexico lowers key interest rate to 8.0%
On June 26, 2025, Banco de México cut its benchmark rate by 50 bps to 8.0% (lowest since August 2022) in a 4–1 vote, with Deputy Governor Heath dissenting due to inflation concerns (~4.51%). The central bank also raised its year-end inflation forecast to 3.7%, projecting inflation will stabilize at 3% by Q3 2026.
Insight
The move reflects confidence in cooling inflation yet highlights caution—signaling a slower rate cut path ahead. Balancing growth support amid trade uncertainties remains a key challenge.
Brazil Central Bank Lifts Growth Outlook After Early-2025 Surge
Brazil’s central bank upgraded its 2025 GDP forecast from 1.9% to 2.1% after strong early-year performance, while signaling inflation nearing target by end‑2027.
Insight
The upward revision underscores solid domestic demand and investment, but sustaining momentum requires ongoing fiscal discipline and policy coherence amid anticipated global headwinds and inflation persistence.
Brazil’s inflation slows in early June as food prices drop
Brazil’s annual inflation slowed to ~5.4% in the first half of June, driven by a moderation in food and beverage prices, easing from ~5.5% in May. Although still above the central bank’s 3 ± 1.5 % target, the slowdown may influence the central bank’s rate decisions. (reuters.com)
Insight
The softer inflation trend suggests monetary policy is working, providing room for the central bank to pause further rate hikes. However, inflation remains sticky, particularly in services, underscoring the need for a cautious approach.
Chile Catches Thousands of Workers Holidaying at State’s Expense
Chile’s Comptroller General uncovered over 25,000 government employees who used sick leave to go on holiday abroad. Several have since resigned or been suspended.
Insight
The scandal highlights serious governance and oversight issues within Chile’s public sector. It may prompt reforms in leave policies and strengthen internal audit mechanisms to reduce misuse of public funds.
Crypto gains foothold in Bolivia as small businesses seek currency alternatives
Bolivia’s economic crisis—marked by 40-year-high inflation and dollar shortages—has driven small businesses and citizens to adopt cryptocurrencies like Bitcoin and stablecoins. Crypto ATMs are spreading in cities like Cochabamba, though experts warn of volatility risks.
Insight
The crypto trend reflects deep distrust in Bolivia’s currency and financial infrastructure. While it provides a hedge, volatility exposes users to loss risk. Policymakers may need to integrate crypto innovations with consumer safeguards.
Canada banking regulator maintains key capital limit for big lenders
On June 26, 2025, OSFI kept the domestic stability buffer (DSB) at 3.5% for Canada’s largest banks, noting that U.S.–Canada trade tensions and geopolitical risks haven’t significantly stressed the system.
Insight
The decision underscores confidence in the Canadian banking sector’s resilience. However, sustained geopolitical volatility and trade uncertainty could necessitate future adjustments to capital requirements.
Canada’s Budget Watchdog Urges Carney to Show Numbers as Spending Rises
Canada’s Parliamentary Budget Officer asked PM Mark Carney to publicly release updated fiscal projections amid planned increases in defense, housing, transport, and infrastructure spending—warning that transparency is critical to maintain investor trust.
Insight
The push for fiscal transparency reflects investor sensitivity to rising deficits. As Canada increases public spending, clear cost estimates and updated forecasts will be essential to reassure markets and uphold fiscal credibility.
Canada Wholesale Sales Estimated to Have Fallen 0.4% in May
Statistics Canada’s flash estimate showed wholesale trade down 0.4% in May, driven by lower machinery, equipment, and supplies sales (www150.statcan.gc.ca).
Insight
The decline continues a trend following April’s drop, signaling potential softening in business investment or inventory demand; if confirmed in final figures, it may indicate cooling economic conditions.
