Economic Policy Evaluation

ECONOMIC POLICY EVALUATION

In addition to their regular forecasts for the major economic indicators, (in February for Latin American Consensus Forecasts and in July for the Consensus Forecasts and Asia Pacific Consensus Forecasts countries) we survey our panelists for their qualitative evaluations of economic policy. The data below sets out the consensus responses for two of the larger Latin American economies. The balance between current monetary and fiscal policy is assessed, as are panelists' views regarding the likely and recommended direction of policy over the next twelve months.

Our survey for Economic Policy Evaluation covers each of the countries listed above. For illustrative purposes we have included forecast tables for Brazil and Mexico, along with a small portion of the text commentary taken from our February 2010 survey below. To view a sample issue of Latin American Consensus Forecasts please click the "Download Sample Issues" button below

Download Sample Issues

¹ Relates to monetary and fiscal policy over the next twelve months.

In Brazil, the benchmark SELIC rate has been slashed to 8.75% as the authorities sought to prop up the economy in the face of headwinds from the global credit crisis. In addition, the government stepped up spending, offering tax breaks on cars and white goods. The measures had the desired effect and Brazil was able to emerge from recession at a much quicker rate than many developed nations. With the economy firmly on a recovery path, the central bank’s rate cutting cycle looks to have troughed. Indeed, over 90% of respondents take the view that monetary policy will and should be tightened over the next 12 months. A similar group believes that current fiscal policy is too stimulative, with the entire panel supporting tighter measures over the next year.

¹ Relates to monetary and fiscal policy over the next twelve months.

With last year’s US recession having pulled Mexican GDP deep into negative territory, policy has become even more important in navigating the downturn and laying the groundwork for the recovery. The central bank, in particular, has been viewed favourably, with 71% judging current policy about right. Looking ahead, 64% of our panel predict that policy will tighten, although the depth of the recession has been such that 57% would rather interest rates stayed unchanged. Still, 43% support Banxico’s forthcoming policy direction. The fiscal outlook has our panel more divided with the emergence of massive public deficits (see chart, above). Our respondents are bracing themselves for higher taxes over the coming year while also putting the spotlight on the lack of structural reforms in the economy.

A portion of text from Latin American Consensus Forecasts, February 15, 2010

Privacy Policy    Site Map

© Copyright Consensus Economics Inc. 2010