Latin America Economy in November 2014

The Central Bank of Chile cut its monetary policy rate for the fourth straight month in October by 25 bp to 3.0%, aiming to boost the economy’s weak growth. The government announced plans to stimulate the economy via spending increases next year. GDP growth slowed this year to 2.4% and 1.9% in the 1Q and the 2Q, respectively. The 1Q figure reflects the slowest pace of growth since 3Q09. The government now plans to increase spending by 9.8% in 2015, most of which is planned for investment.

The unemployment rate in Argentina increased to 7.5% in the 2Q14, from 7.1% in the 1Q14. The 1Q14 GDP growth figure was revised up from a 0.2% y-o-y contraction to a 0.3% expansion, while the 2Q14 posted no y-o-y growth. In October, the Ministry of Finance in Colombia announced the sale of $1 billion in bonds in the financial markets in order to fund next year’s budget. Half of the sold dollar debt matures in 2014, while the other half falls due in 2044. The government still needs to borrow $2 billion to meet its funding needs for 2015. The inflation rate in Uruguay was recorded to be at 8.4% in September 2014, down from 8.8% in August. The country’s trade balance posted a deficit of $167 million in September. Uruguay’s foreign exchange reserves decreased to $17.8 billion in September, down from $18.1 billion in August. The benchmark interest rate remained unchanged at 9.25%.