Vicente Izquierdo Munoz - Explains the Decline in South American Inflation
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Vicente Izquierdo Munoz - Explains the Decline in South American Inflation

Wednesday, September 27, 2017 3:47 PM
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Vicente Izquierdo Munoz

MONTE CARLO, MONACO / ACCESSWIRE / September 27, 2017 / With the exception of Venezuela, South America has been experiencing a marked relaxation this year in regards to inflationary pressures. The trend is expected to persist for the rest of 2017 and the outlook for the region's gross domestic product (GDP) is optimistic, with projections for its return to growth after four years of deterioration. Although some countries on the continent have yet to consign political tremors to the past, the cards are stacked favorably and a steady downward trajectory for inflation should help spur growth, according to prominent forex expert and broker Vicente Izquierdo Munoz.

In its first-quarter economic report on Latin America, BBVA Research said it expected inflation in South America to continue abating and move closer to targets set by regional central banks. This would, in turn, create favorable circumstances for official interest rate cuts. A few months later, BBVA Research released a new report, noting that inflation had continued to trend down in South America through the second quarter. Most countries on the continent published unexpectedly low figures, which the research firm attributed to stable exchange rates, subdued domestic demand, and moderating oil and food prices. The second-quarter report from FocusEconomics also pointed to stability on the Latin American inflation front, Venezuela excluded. While Brazil recorded the lowest level in 18 years, numbers from the majority of other countries kept the figure in August unchanged from July at 5.4%. FocusEconomics projects inflation of 6.3% for the region in 2017 and a drop to 5.2% in 2018.

Elsewhere in South America, recent inflation data have provided cause for optimism, as Vicente Izquierdo Munoz notes. Brazil, the region's leading economy, partly owed its second-quarter economic uptick to lower inflation. In Chile, the government downgraded its 2017 projections for national economic growth, but Finance Minister Rodrigo Valdes said in July that 12-month inflation was likely to stand at 2.8% as opposed to a previously forecast 3%. Reuters reported at the time that Chile had seen a substantial reduction in inflationary pressures, but its GDP was unlikely to benefit materially from that due to political uncertainty accompanying an election year. Argentina, the second-biggest economy in South America, published in July its first official inflation figures since late 2015, when Mauricio Macri stepped into his role as President. According to Indec, Argentina's government statistics agency, core inflation in June came at 1.2%. It is expected to remain above the 12% to 17% target range for the year, the Argentine central bank said, noting nevertheless that ''the economy has returned to its path of disinflation.''

Vicente Izquierdo Munoz is among the foremost brokers in the forex and contracts for differences (CFDs) markets. He established his international reputation as the co-founder of a company dedicated to providing the best possible offline trading experience in CFDs, stocks, commodities, and indices. His brokerage firm serves retail and institutional investors in more than 180 countries across Europe, Asia, Middle East, Africa, and Latin America.

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SOURCE: Vicente Izquierdo Munoz

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