In May it reached 68.6% of GDP and we expect it to increase to 73% by the end of 2016 and to 78% in 2017. There is still a lot of uncertainty on the new government's ability to adopt measures to put an end to the upward trend of gross debt. Today in Chile, activity data by sector will be published. We expect figures to continue to point to weak aggregate economic activity.

Brazil - Gross public debt increased to 68.6% of GDP in May

The public sector generated a BRL18.1bn primary deficit in May, in comparison to a BRL6.9bn deficit in the same month last year. Taking that into account, the primary result accumulates a BRL13.7bn deficit for the year, which compares poorly to the BRL25.5bn surplus recorded for the same period last year. These negative primary fiscal results reflect the impact on public revenues of the contraction in domestic demand and the lack of structural measures to cut public expenditure. With respect to the latter, it is worth noting that a political agreement to approve the project presented by the government to prevent expenditure from growing in real terms from 2017 onwards is still far away. In this environment, the growth of gross public debt is not surprising. In May, for instance, it increased to 68.6% of GDP from 67.6% in April and 66.5% in December 2015. We expect it to continue to trend upwards and reach around 73% and 78% by the end of 2016 and 2017, respectively.



What to watch today

Chile - Activity data by sector (May, 9:00hrs NYT)

We expect manufacturing output to have increased around 2.7% YoY in May, while retail sales are expected to show a +1.9% YoY increase over the month. Overall, figures should continue to point to weak aggregate economic activity.

Chile - Unemployment rate (May, 9:00hrs NYT)

We expect the jobless rate to have increased to 6.7% in May, showing a slowdown in job-creation, both in terms of salaried employment as well as self-employment.

Colombia - Urban Unemployment rate (May, 11:00hrs NYT)

We expect May‘s urban unemployment rate to stand at 9.3%. That rate is higher than the one observed last month (seasonally adjusted). Annual job-creation will decelerate in May YoY with respect to last month (job creation in April: 1.4% YoY was higher than the average of the year: 0.7% YoY).