Latin America Economics Research

Research evidence excerpt

Latin America Economics Research

es: total activity contracted by has remained persistent. In our base case, core price pressures

-0.9%oya, while ex-mining activity expanded by just are likely to intensify as activity regains momentum. In addi-

0.7%oya. The Board attributes part of the shortfall to supply- tion, the weaker exchange rate, driven by tighter external

side factors in the natural resource sectors. On the demand monetary conditions, could add further pressure to core ser-

side, the more persistent drag remains investment. The state- vices inflation. As a result, we continue to view the next poli-

ment notes that high-frequency indicators point to a sharper cy-rate move as a 25bp hike, with 1Q27 remaining our base-

slowdown in 2Q capex than staff had projected. Even so, the case timing.

forward-looking outlook remains constructive. A strong

Peru: Keiko Fujimori's era beginscapex pipeline for 2026-29 suggests the current weakness

Keiko Fujimori was sworn in on July 28 as Peru’s ninth presi-reflects timing effects rather than a downgrade to the medi-

dent in a decade, after winning the June runoff by fewer thanum-term investment cycle. The Board also noted that con-

50,000 votes. Her inaugural address paired a security-and-or-sumption momentum is easing from the strong pace seen ear-

der agenda with a broad social policy package. On security,lier this year, broadly in line with its projections.

she unveiled an “iron-fist” anti-crime strategy modeled in part

The hawkish message comes from inflation dynamics. Head- on El Salvador’s approach, including plans for a new mega-

line CPI rose to 4.3%oya in June, exceeding the central sce- prison and identity protection for judges handling organized-

nario contemplated by the monetary authority. More impor- crime cases.