LATAM WEEKAHEAD-Activity data to show Brazil economy stabilizing

Sun Aug 2, 2009 2:22pm EDT
By Walter Brandimarte
NEW YORK, Aug 2 (Reuters) - This week's series of activity indicators in Brazil will likely provide additional signs that Latin America's largest economy is stabilizing, and possibly growing again.
Inflation, meanwhile, should remain contained not only in Brazil but in Latin America as a whole -- with data showing a slow disinflation process in Mexico.
The week will start with Brazil's key industrial production data for June, which economists expect to have declined around 10 percent in comparison to the same month a year ago, improving from a 11.3 percent yearly fall in May.
Brazil's manufacturing sector is improving "as local firms enjoy the benefits of stronger domestic demand and ampler financing opportunities," said Alvise Marino, emerging markets analyst with IDEAglobal.
RBC Capital Markets said in a research note that "the dominant message is likely to be that the economy is stabilizing or re-accelerating at the margin, with a still large output gap, though inflation pressures remain muted."
Several Latin American countries will release consumer price data later in the week, including Colombia, Chile, Brazil and Mexico.
Brazil's benchmark IPCA consumer price index, due on Friday, is expected to have risen 0.27 percent in July, compared to a 0.36 percent increase in June.
Also on Friday Mexico will release its consumer inflation for July, which is expected to accelerate slightly to 0.3 percent, after a 0.18 percent rise in June. Prices will be pressured by the normalization of tourism costs and higher airfare, following the flu impact.
Nevertheless, the forecast for Mexico's inflation "assumes a continuation of the recent slow disinflation trend, consistent with year-on-year rates moving down," said Barclays Capital.
The following are some other key data points investors will be watching this week:
Wednesday, Aug. 5
* Colombia - July CPI: economists on average expect a 0.11 percent monthly increase, following a decline of 0.06 percent in June.
"The forecast reflects further help from food prices and would cause the year-on-year rate to move down to 3.4 percent," Barclays Capital said.
Thursday, Aug. 6
* Chile - July CPI: economists on average expect a negative reading of 0.2 percent month-on-month, after a 0.03 percent rise in June.
* Peru - rate decision: although most analysts believe the central bank finished easing its monetary policy last month, some bet policy makers will cut Peru's base interest rate one more time this week, from the current level of 2.0 percent to 1.5 percent. (For a real-time schedule of upcoming economic indicators in Latin America, see ECONLATAM) (Editing by Leslie Adler)