Brazil Economic Forecast

Brazil Economic Outlook

July 12, 2016

Brazil’s economy lingered in a deep recession in Q1 as high unemployment and political turmoil hit the domestic economy. However, tentative signs of improvement have begun to emerge suggesting that the economy may be returning from rock bottom. An improvement in the trade balance led the current account to record a surplus for the second consecutive month in May and both consumer and business confidence rose in June. Meanwhile, the country will be thrust further into the international spotlight just as political turmoil comes to a head. Brazil is gearing up to host the summer Olympic Games in August, yet security concerns coupled with the government’s empty coffers are casting a shadow on the event. The Senate will hold an impeachment vote in August for ousted President Dilma Rousseff. It must pass by two-thirds for Rousseff to be removed from office and a number of senators remain undecided. In addition, the Lower House of Congress must elect a new leader after suspended speaker Eduardo Cunha resigned in July on implications that he was involved in a corruption scandal.

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 Yield11.980.0 %Jul 26
Exchange Rate3.28-0.28 %Jul 26
Stock Market56,783-0.16 %Jul 26

Brazil Economic Growth

July 12, 2016

The economy is expected to remain in a deep recession this year as political noise has delayed fiscal adjustment and stalled much-needed reforms. While interim President Michel Temer has made some steps forward with reform legislation, it remains to be seen whether he has the support needed to pass bills through Brazil’s divided Congress. FocusEconomics panelists see the economy contracting 3.3% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, the panel sees the economy starting to recover meekly and growing 0.9%.

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