Trading Market Insights: February 2025

In January, Brazil’s interest rates increased, confirming its previous signal of further tightening if inflation risks persist, while Mexico’s stayed the same. Inflation in both Brazil and Mexico softened. Manufacturing PMI increased in Brazil and fell in Mexico.

The Leeco Trading team is carefully monitoring international trading market developments, particularly within the Latin American region. Here are some of the biggest headlines we are watching.

Brazil’s Trade Surplus Plummets

Brazil’s trade surplus plummeted 65.1% in January compared to the same month last year, as imports rose by double digits and exports fell. Latin America’s largest economy posted a $2.2 billion surplus for the month, down from $6.2 billion a year earlier. The result followed a 5.7% drop in exports from January last year, totaling $25.2 billion.

Brazil Cuts GDP Forecast

Brazil’s government cut its economic growth forecast for this year to 2.3% amid ongoing monetary tightening and lifted its inflation outlook, though it projected a more benign scenario than the market. The finance ministry’s economic policy secretariat now expects consumer prices to rise 4.8% this year, up from a previous forecast of 3.6% in November.

Mexico Questions Trump Tariffs

Mexico’s government questioned the fairness of a 25% tariff ordered by U.S. President Donald Trump on its steel and aluminum imports, stressing that Mexico buys more steel from the U.S. than it exports to its northern neighbor. Mexican Economy Minister Marcelo Ebrard said the tariffs were unfair and unjustified because the U.S. runs a steel and aluminum trade surplus with Mexico. Ebrard also pointed out data showing Mexican steel shipments to the U.S. falling since 2022, while Mexico’s imports of U.S. steel grew.

Brazil’s Services Activity Posts Surprise Drop

Services activity in Brazil ended 2024 on a negative note, despite four consecutive years of growth, with the sector unexpectedly slipping in December as the local economy provides cooling signs. According to statistics agency IBGE, services activity in Latin America’s largest economy was down 0.5% in December from November, undershooting market forecasts of a 0.1% expansion. Service sector activity is the main engine of Brazil’s economy and helped the country grow more than expected throughout last year, but has been slowing in recent months amid tight financial conditions.

This information is an excerpt from Leeco Trading’s February 2025 Trading Market Report newsletter.

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