Brazil Economic Forecast

Brazil Economic Outlook

January 19, 2016

Low commodity prices, high inflation, large fiscal imbalances and political crisis all came to a head in 2015, with Brazil’s economy on pace to have contracted at the fastest rate in over a decade. After GDP tallied the worst annual reading on record in Q3, data for Q4 remained abysmal: industrial production plunged in November and consumer confidence fell to a new record low in December. On the political front, Nelson Barbosa took over as Finance Minister on 21 December, inheriting the tough role of trying to halt the government’s deteriorating finances amid dismal economic data. Barbosa, who is more left-leaning than his predecessor, has stated that correcting government accounts remains a top priority, however, a specific plan has not yet been unveiled and doubts remain regarding whether he has the ability or willpower to pass vital reforms.

Brazil Economy Data

20102011201220132014
Population (million)195197199201203
GDP per capita (USD)11,30613,24012,10411,87811,567
GDP (USD bn)2,2102,6142,4122,3882,345
Economic Growth (GDP, annual variation in %)7.63.91.82.70.1
Domestic Demand (annual variation in %)9.54.72.03.9-0.9
Consumption (annual variation in %)6.44.83.92.90.9
Investment (annual variation in %)17.86.6-0.66.1-4.4
Industrial Production (annual variation in %)10.20.4-2.32.1-3.2
Retail Sales (annual variation in %)10.96.78.44.32.2
Unemployment Rate6.76.05.55.44.8
Fiscal Balance (% of GDP)-2.5-2.6-2.5-3.3-6.7
Public Debt (% of GDP)39.737.136.034.337.4
Money (annual variation in %)16.718.79.110.99.9
Inflation Rate (CPI, annual variation in %, eop)5.96.55.85.96.4
Inflation Rate (CPI, annual variation in %)5.06.65.46.26.3
Inflation (PPI, annual variation in %)13.94.19.15.12.2
Policy Interest Rate (%)10.7511.007.2510.0011.75
Stock Market (annual variation in %)1.0-18.17.4-15.5-2.9
Exchange Rate (vs USD)1.661.862.052.362.66
Exchange Rate (vs USD, aop)1.761.671.952.162.35
Current Account (% of GDP)-2.1-2.0-2.2-3.4-4.4
Current Account Balance (USD bn)-47.3-52.5-54.2-81.2-104.0
Trade Balance (USD billion)20.129.819.42.3-4.0
Exports (USD billion)202256243242225
Imports (USD billion)182226223240229
Exports (annual variation in %)32.026.8-5.3-0.2-7.0
Imports (annual variation in %)42.324.5-1.47.4-4.4
International Reserves (USD)289352373359364
External Debt (% of GDP)11.611.413.012.914.8

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Brazil Facts

ValueChangeDate
Bond Yield16.100.40 %Feb 05
Exchange Rate3.900.35 %Feb 05
Stock Market40,592-0.56 %Feb 05

Brazil Economic Growth

January 19, 2016

Brazil’s outlook is bleak. The economy is unlikely to rebound without much-needed yet unpopular economic reforms, but a hostile Congress and record-low approval ratings for the government may lead to slow implementation. FocusEconomics panelists see the economy contracting 2.6% in 2016, which is down 0.8 percentage points from last month’s forecast. For 2017, the panel sees the economy rebounding and growing 0.9%.

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