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Brazil's Q1 GDP contracts; US to impose tariffs on Mexico imports

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Brazil's Q1 GDP contracts; US to impose tariffs on Mexico imports

* Brazil's statistics agency IBGE recorded an economic contraction of 0.2% in the first quarter as weak industrial and agricultural production, as well as lower capital investments, dragged on growth. The figures from IBGE confirm estimates from the central bank, which had warned of a potential contraction for the three-month period.

* U.S. President Donald Trump said he will impose a 5% tariff on all goods coming from Mexico effective June 10 unless illegal immigration across the U.S.-Mexico border is stopped, Reuters reported. The amount will then increase by 5% effective on each of the first days of July, August, and September, before finally reaching 25% on Oct. 1. Shortly afterward, Mexican President Andres Manuel Lopez Obrador responded, saying Trump's "America First" policy is a "fallacy."

MEXICO AND CENTRAL AMERICA

* Fitch Ratings upgraded the long-term and short-term ratings of Mexico's Banco Bancrea SA Institución de Banca Múltiple to BBB+(mex) and F2(mex) from BBB(mex) and F3(mex), respectively. Fitch said the bank's business profile has shown "continuous strengthening" and has a "modest but growing financial performance," among other factors.

* Fitch Ratings placed Banco Azteca El Salvador SA's long- and short-term national ratings of AA(slv) and F1+(slv) on negative observation, following the announcement of the sale agreement for the banking operations of Grupo Elektra SAB de CV in El Salvador to Perinversiones SA de CV. The negative observation reflects the probability of a rating downgrade once the sale agreement is approved.

* Mexican President Andres Manuel Lopez Obrador said the country's economy can still grow by 2% in 2019, even if the central bank lowered its growth forecast to between 0.8% and 1.8%, Reuters reported. Minutes from the Banco de México monetary policy meeting earlier in May also showed majority of the board members saying the balance of growth risks was tilted downward. Gerardo Esquivel, a board member, voted against the statement, due to its restrictive tone.

CARIBBEAN

* Moody's revised the outlook of Sura Re Ltd., based in Bermuda, to stable from negative, following the outlook change of Colombia's sovereign bond rating. The rating agency took into account the close linkages between the credit profile of the company and that of Colombia's sovereign, which are reflected by Sura Re's strong integration with its parent Grupo de Inversiones Suramericana SA.

BRAZIL

* AM Best raised IRB-Brasil Resseguros SA's financial strength rating to A(Excellent) from A-(Excellent), and also raised the long-term issuer credit rating to "a" from "a-," while revising the outlooks on both to stable from positive. The ratings reflect IRB Brasil's strong balance sheet and operating performance.

* Banco Santander (Brasil) SA CEO Sérgio Rial was summoned to appear along with six other bank directors in a parliamentary committee hearing on tax evasion in the municipality of São Paulo, Valor Econômico reported. According to the parliamentary committee, Santander Brasil's leasing company still owes about 43 million reais in unpaid taxes. Santander Brasil said they will make an appeal.

* Brazilian bank card payment processor Getnet Adquirencia e Serviços para Meios de Pagamento SA launched an e-commerce services platform that also includes business management services for merchants or security solutions, among others, Valor Econômico reported.

* Brazil's national monetary council has simplified the rules for the disclosure of the financial statements of banks and other financial institutions, requiring their publication only online, Reuters reported, citing João Andre Pereira, head of the central bank's regulatory department. Only the annual financial statements still need to be published in newspapers.

* Itaú Unibanco Holding SA cancelled a share buyback program from December 2017, and authorized a new one authorizing the repurchase of 15,000,000 common shares and up to 75,000,000 preferred shares. The new program will run until November 2020.

* Brazilian economy minister Paulo Guedes said the central bank can only lower interest rates to stimulate activity if the fiscal regime is stabilized, O Estado de S. Paulo reported. "With the reform of pensions, the interests of the market will fall and the central bank will sanction lower interest rates," Guedes said.

ANDEAN

* The International Monetary Fund stopped working on Venezuela's economic figures in January because of doubts surrounding the legitimacy of the country's government, Reuters reported, citing an IMF spokesperson. The report comes days after Venezuela's central bank published economic indices for the first time since 2016. The spokesperson said the organization could not fully determine the quality of the recent figures, "as we have not had the opportunity to make a full assessment in the absence of contacts with the authorities."

SOUTHERN CONE

* Fitch Ratings expects the loan quality and profitability of Argentine banks will face pressure in 2019 due to the persistent macroeconomic challenges created by an ongoing recession, as well as political confusion surrounding upcoming elections in October and November. Fitch also noted that real credit growth declined in 2018 due to a challenging operating environment. The rating agency also expects negative real growth in 2019, with little to no improvement in 2020.

* The Argentine central bank reduced reserve requirements concerning judicial deposits, credit cards and other products for public banks, El Cronista reported. Market sources estimate that this reduction will free 20 billion Argentine pesos from the entities.

* Chilean banks reported a combined profit of US$840 million in the first quarter of the year, 9.2% lower than the year-ago period, Diario Financiero reported, citing data from the SBIF banking regulator. The decrease was attributed to lower inflation and its effect on interest income, and higher taxes.

* Banco Santander Río SA Chairman Enrique Cristofani said the name change of the entity, which will remove the Río from its name and adopt the generic global name Santander, will be effective the second half of July, El Cronista reported.

IN OTHER PARTS OF THE WORLD

* Middle East & Africa: Bank of Kigali in talks to buy insurer; Standard Bank climate risk plan rejected

* Europe: Metro Bank probes launched; Commerzbank faces fine; VTB, Alpha Bank profits down

Pablo Jiménez Arandia contributed to this article.

The Daily Dose has an editorial deadline of 8:00 a.m. São Paulo time, and scans news sources published in English, Portuguese and Spanish. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.