Brazil Economic Forecast

Brazil Economic Outlook

June 13, 2017

Testimony from a corruption scandal implicated President Michel Temer directly in May, unleashing a political bombshell in Brazil and casting doubt on whether Temer will fulfill his term. Although Temer has held onto power so far and was cleared by the top court of accusations that he violated campaign finance laws on 9 June, he is deeply unpopular and the government’s implication in a corruption scandal is threatening its stability and effectiveness. The political chaos bodes poorly for the economy’s battered recovery as reform momentum will likely slow as politics takes center stage. Although GDP improved notably in Q1 thanks to a record harvest of soybeans and improved sentiment, overall conditions are still weak and incoming data is mixed. Industrial production improved in April but growth remained weak, however, the current account recorded a solid surplus while the manufacturing PMI rose in May.

Brazil Economy Data

20112012201320142015
Population (million)197199201203204
GDP per capita (USD)13,24512,36412,27812,1068,792
GDP (USD bn)2,6142,4642,4682,4551,798
Economic Growth (GDP, annual variation in %)4.01.93.00.5-3.8
Domestic Demand (annual variation in %)4.61.93.70.3-6.4
Consumption (annual variation in %)4.83.53.52.3-3.9
Investment (annual variation in %)6.80.85.8-4.2-13.9
Industrial Production (annual variation in %)0.4-2.32.1-3.0-8.3
Retail Sales (annual variation in %)6.78.44.32.2-4.4
Unemployment Rate8.07.47.16.88.5
Fiscal Balance (% of GDP)-2.5-2.3-3.0-6.0-10.2
Public Debt (% of GDP)51.353.751.556.365.5
Money (annual variation in %)18.79.110.99.96.3
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)-2.9-3.0-3.0-4.2-3.3
Current Account Balance (USD bn)-77.0-74.2-74.8-104.2-59.4
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)11.413.312.714.418.6

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Brazil Facts

ValueChangeDate
Bond Yield10.51-1.27 %Jun 16
Exchange Rate3.290.56 %Jun 16
Stock Market61,626-0.48 %Jun 16

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Brazil Economic Growth

June 13, 2017

The sharp increase in political uncertainty led our analysts to downgrade Brazil’s outlook this month. The FocusEconomics panel sees GDP expanding a meagre 0.5% in 2017, which is down 0.1 percentage points from last month’s forecast. The recovery is seen gaining speed in 2018 and GDP should increase 2.2%.

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