Latin America News
LAST UPDATE: June 28, 2025
Canada’s GDP contracts in April, likely another decline in May
Canada’s GDP shrank by 0.1% in April 2025, with manufacturing and wholesale trade experiencing sharp declines. Preliminary estimates indicate another 0.1% drop in May, raising signals of a slowdown. Finance and insurance sectors showed modest growth.
Insight
The back-to-back contraction raises alarm for the Bank of Canada, which may consider cutting interest rates in July to support the economy. Persistent weakness in goods-producing industries poses risks to recovery momentum.
Canada’s Digital Services Tax Stays in Place Despite G-7 Deal
Canada is moving forward with its 3% digital services tax on major tech firms (Meta, Google, Amazon), retroactive to 2022, despite international pressure and a G‑7 agreement. The first payment was due June 30, 2025.
Insight
Maintaining this tax underscores Canada’s determination to tax digital giants, even at the cost of escalating U.S. trade tensions. It could set a precedent for other nations balancing digital sovereignty and global economic diplomacy.
Mark Carney faces a separatist push in Canada’s oil‑rich west
In Alberta, separatist sentiment is rising amid frustration with federal policies and perceived eastern dominance. While only 29% support full separation, more endorse holding a referendum. Alberta Premier Smith has heightened regional autonomy debates.
Insight
This regional discontent presents a political test for PM Carney, who must reconcile Alberta’s energy interests with national unity. Balancing pipeline support and environmental commitments will be key to bridging divides.
Chile Central Bank Policymaker Sees Good Omens After Long Inflation Fight
A Chilean central bank board member expressed optimism, stating that recent economic data and inflation trends suggest a return to target by early 2026.
Insight
After a prolonged battle with high inflation, this positive outlook signals potential rate cuts ahead. It’s a hopeful indication that monetary stability measures are gaining traction—but uncertainties around global and domestic demand remain.
Crime costs Chile $8 billion a year as violence chokes economic growth
A study by CLAPES UC finds that rising crime in Chile costs approximately US $8.2 billion annually (about 2.6% of GDP). Businesses are closing earlier or permanently, consumer behavior is shifting to daytime, and theft and violence are deterring investment. Santiago’s La Piojera bar reports a 60% drop in sales due to early closures.
Insight
Crime, even at moderate levels relative to Latin America, has outsized economic impacts in previously safer countries. The findings highlight the importance of addressing public safety not only for social but economic stability.
Brazil central bank sees rate cut debate as premature, says official
Central bank director Diogo Guillen stated at a Barclays event that it is premature to debate rate cuts. The benchmark rate was raised to 15%—a two-decade high—after cumulative hikes of 450 basis points. Inflation is expected to fall to 3% by Q4 2026; policymakers note economic resilience amid slowing growth.
Insight
The monetary policy remains deliberately contractionary. The bank seeks to balance inflation control with careful observation of lagged effects, indicating caution before considering easing.
Colombia central bank holds rate amid fiscal uncertainty
Colombia’s central bank held its benchmark interest rate at 9.25%, citing rising fiscal risk after suspending its fiscal rule and increasing deficit targets to 7.1% of GDP. Inflation remains elevated at 5.05%, above the 3% goal. Most analysts expect rate cuts later in 2025 .
Insight
The rate hold reflects a cautious approach amid fiscal and inflation uncertainty. Tight monetary policy despite pressures for growth signals institutional resilience, but raises questions on the timing and sequencing of future easing.
Moody’s Downgrades Colombia Citing Suspension of Fiscal Rule
Moody’s downgraded Colombia’s credit rating to Baa3 (stable), while S&P moved it to BB, citing weaker fiscal performance and the government’s decision to suspend the fiscal rule, allowing a deficit increase to 7.1% of GDP (bloomberg.com, reuters.com).
Insight
The downgrade highlights growing concern over fiscal discipline and rising public debt, clouding investor sentiment. It underscores the need for Colombia to restore budgetary credibility to avoid borrowing costs escalating further.
Bolivia crypto transactions up over 530% amid currency woes
Bolivia’s crypto and virtual asset transactions surged over 530%, from $46.5 M in H1 2024 to $294 M in H1 2025, with $68 M in May alone. This follows the lifting of a crypto ban in June 2024, amid acute economic crisis including record inflation and currency depreciation.
Insight
The spike in crypto use reflects deep economic instability. While digital assets offer a lifeline for transactions and remittances, they also underscore the fragility of monetary systems facing hyperinflation and currency collapse. Regulators are racing to establish frameworks.
