Brazil Economic Forecast

Brazil Economic Outlook

December 5, 2016

The economy took some steps forward in Q3 and GDP recorded the smallest fall in over one year. While the result confirms that the economy is returning from rock bottom, economic dynamics remain feeble and the road to recovery is likely to be long. Leading indicators suggest that the economy is on weak footing in Q4: consumer confidence and the manufacturing PMI fell in November. On the political front, progress has been made yet the stability of the government is at risk. The Senate approved a cap on federal spending in the first of two votes on 29 November, despite anti-austerity protests, a win for the government. In addition, the federal government reached an agreement with cash-strapped states to provide them support for needed structural reforms. However, political uncertainty has risen sharply as a variety of scandals have engulfed the government and led to a number of resignations. Moreover, the fallout from a massive plea bargain that is in the works could hurt the government’s support further as it is expected to implicate scores of politicians in a corruption scandal. The country has seen large protests in recent weeks and President Michel Temer’s loss of support bodes poorly for the passing tough reforms next year.

Brazil Economy Data

20112012201320142015
Population (million)197199201203204
GDP per capita (USD)13,23712,34212,24411,9158,651
GDP (USD bn)2,6132,4592,4612,4161,769
Economic Growth (GDP, annual variation in %)3.91.93.00.1-3.8
Domestic Demand (annual variation in %)4.72.13.8-0.9-6.8
Consumption (annual variation in %)4.73.53.51.3-4.0
Investment (annual variation in %)6.70.85.8-4.5-14.1
Industrial Production (annual variation in %)0.4-2.32.1-3.0-8.3
Retail Sales (annual variation in %)6.78.44.32.2-4.3
Unemployment Rate8.07.47.16.88.5
Fiscal Balance (% of GDP)-2.5-2.3-3.0-6.1-10.4
Public Debt (% of GDP)35.132.931.233.738.5
Money (annual variation in %)18.79.110.99.96.2
Inflation Rate (CPI, annual variation in %, eop)6.55.85.96.410.7
Inflation Rate (CPI, annual variation in %)6.65.46.26.39.0
Inflation (PPI, annual variation in %)4.19.15.12.211.3
Policy Interest Rate (%)11.007.2510.0011.7514.25
Stock Market (annual variation in %)-18.17.4-15.5-2.9-13.3
Exchange Rate (vs USD)1.862.052.362.663.96
Exchange Rate (vs USD, aop)1.671.952.162.353.34
Current Account (% of GDP)-2.9-3.0-3.0-4.3-3.3
Current Account Balance (USD bn)-77.0-74.2-74.8-104.2-58.9
Trade Balance (USD billion)29.819.42.3-4.019.7
Exports (USD billion)256243242225191
Imports (USD billion)226223240229171
Exports (annual variation in %)26.8-5.3-0.2-7.0-15.1
Imports (annual variation in %)24.5-1.47.4-4.4-25.2
International Reserves (USD)352373359364356
External Debt (% of GDP)11.412.712.514.619.1

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Brazil Facts

ValueChangeDate
Bond Yield12.191.08 %Dec 06
Exchange Rate3.41-0.39 %Dec 06
Stock Market61,0882.10 %Dec 06

Brazil Economic Growth

December 5, 2016

The economy should exit recession next year, after falling 3.4% in 2016. However, the pace of recovery is likely to be meagre amid austerity measures and modest external conditions. Analysts see GDP growth at 0.8% in 2017, which is down 0.2 percentage points from last month’s forecast.

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