Latin America News
LAST UPDATE: May 30, 2025
Canada’s Carney Welcomes Trade Court’s Tariff Decision
Canadian Prime Minister Mark Carney welcomed a U.S. federal court ruling that invalidated many of former President Trump’s tariffs, aligning with Canada’s stance that the measures were unlawful and unjustified.
Insight
The U.S. Court of International Trade’s decision to block several of Trump’s tariffs marks a significant development in U.S.-Canada trade relations. While the ruling is a legal victory for Canada, key sectors like steel, aluminum, and automotive remain affected by other tariffs. Carney’s response underscores Canada’s intent to reshape its economic and security ties with the U.S., seeking more equitable trade practices. The ruling may also influence ongoing negotiations and could lead to a reevaluation of trade strategies on both sides. However, the persistence of certain tariffs indicates that trade tensions are far from resolved, necessitating continued diplomatic engagement.
Canada Current Account Deficit Narrows to C$2.13 Bln in 1Q
Canada’s current account deficit narrowed to C$2.13 billion in the first quarter, reflecting improved trade balances and increased investment income.
Insight
The reduction in Canada’s current account deficit suggests a strengthening of the country’s external financial position. Improved trade balances indicate robust export performance or reduced import reliance, contributing positively to GDP. Increased investment income may reflect better returns on foreign investments, enhancing national income. This narrowing deficit could bolster the Canadian dollar and provide the central bank with more flexibility in monetary policy decisions. However, ongoing global economic uncertainties and trade tensions, particularly with the U.S., could pose challenges to maintaining this positive trend.
Brazil’s bank lending picks up in April despite tight borrowing costs
In April, Brazilian bank lending increased despite high borrowing costs, with a rise in default rates and average spreads on non-earmarked loans.
Insight
The uptick in bank lending amidst tight monetary conditions indicates strong credit demand, possibly driven by consumer needs or business investments. However, the accompanying rise in default rates and loan spreads suggests increasing credit risk and potential strain on borrowers. This scenario reflects a delicate balance for policymakers, who must manage inflation and economic growth while ensuring financial stability. The central bank may need to monitor credit quality closely and consider targeted measures to support vulnerable sectors. Sustained lending growth under high-interest rates could also signal underlying economic resilience, but caution is warranted to prevent overheating or financial imbalances.
Brazil central bank to launch public consultation on credit card interchange fee caps
Brazil’s central bank announced plans to initiate a public consultation on capping credit card interchange fees, aiming to enhance transparency and reduce costs for consumers.
Insight
The proposed consultation reflects the central bank’s commitment to fostering a more competitive and efficient payments ecosystem. By considering caps on interchange fees, the initiative seeks to lower transaction costs, potentially benefiting consumers and small businesses. However, such regulatory changes could impact the revenue models of banks and payment processors, necessitating adjustments in their operations. The move aligns with global trends towards greater financial inclusion and digital payment adoption. Stakeholder engagement during the consultation process will be crucial to balance diverse interests and ensure effective policy outcomes.
Brazil to discuss adjustments to credit guarantee fund soon
Brazil’s Credit Guarantee Fund (FGC) currently holds reserves below its target, prompting upcoming discussions on necessary adjustments to strengthen financial stability.
Insight
The FGC’s reserve shortfall raises concerns about its capacity to safeguard depositors in the event of bank failures. The planned discussions indicate proactive measures to reinforce the fund’s resilience, which is vital for maintaining public confidence in the banking system. The situation also highlights the importance of robust risk management practices, especially amid recent banking sector consolidations. Enhancing the FGC’s reserves may involve increased contributions from financial institutions or government support. Ensuring the fund’s adequacy is essential to mitigate systemic risks and uphold financial stability in Brazil’s evolving economic landscape.
Bank of Mexico’s rate decision marked by trade policy pressures, minutes show
The Bank of Mexico’s latest monetary policy decision reflects significant global trade policy uncertainties, leading to a downward revision of the 2025 GDP growth forecast to 0.1%.
Insight
The central bank’s acknowledgment of global trade policy uncertainties, particularly those stemming from U.S. tariffs, underscores the interconnectedness of Mexico’s economy with international trade dynamics. The sharp downgrade in growth projections indicates the substantial impact such external factors can have on domestic economic performance. Despite inflation rates exceeding the target range, the bank anticipates stabilization by Q3 2026, suggesting a cautious optimism. However, the presence of downside risks necessitates vigilant monitoring and potentially adaptive monetary policies to navigate the uncertain economic landscape.
British Virgin Islands, Bolivia Poised to Join Dirty Money List
The British Virgin Islands and Bolivia are expected to be added to the Financial Action Task Force’s (FATF) list of jurisdictions under increased monitoring due to concerns over money laundering.
Insight
Inclusion on the FATF’s “grey list” can have significant ramifications for a country’s financial sector, including increased scrutiny from international investors and potential challenges in accessing global financial markets. For the British Virgin Islands, a renowned offshore financial center, this development could deter foreign investment and prompt regulatory overhauls. Bolivia may face similar pressures to enhance its financial oversight mechanisms. Both jurisdictions will need to implement robust anti-money laundering measures to address the FATF’s concerns and mitigate potential economic repercussions.
Colombia raises taxes on oil, gold amid income shortfall
Colombia has increased taxes on oil and gold sectors to address a significant income shortfall, aiming to bolster fiscal revenues amid economic challenges.
Insight
The decision to hike taxes on key export commodities reflects the government’s urgent need to address fiscal deficits. While this move may provide short-term revenue relief, it could also discourage investment in the oil and gold sectors, potentially impacting long-term economic growth. Balancing immediate fiscal needs with sustainable economic development will be crucial. The government may need to consider complementary measures, such as expenditure rationalization and diversification of the economy, to ensure fiscal stability without compromising growth prospects.
Economists Are Ever More Gloomy About Colombia’s Fiscal Outlook
Economists have increasingly downgraded Colombia’s fiscal outlook, citing lagging tax revenues and rising expenditures that threaten fiscal stability.
Insight
The persistent downgrades in fiscal projections signal deepening concerns over Colombia’s economic management. Lagging tax revenues, possibly due to subdued economic activity or inefficiencies in tax collection, coupled with rising expenditures, may lead to widening fiscal deficits. This scenario could undermine investor confidence, elevate borrowing costs, and constrain the government’s ability to finance essential services. To restore fiscal health, comprehensive reforms aimed at enhancing revenue generation, controlling expenditures, and stimulating economic growth are imperative.
