Brazil Economic Forecast

Brazil Economic Outlook

June 14, 2022

Growth picked up somewhat in Q1 according to recent data, underpinned by a strong positive contribution from the external sector, as exports of goods and services rose sharply. In contrast, private consumption growth was unchanged from Q4, while government consumption growth slowed and fixed investment contracted at the fastest pace since Q2 2021. Investment was likely restrained by higher interest rates and inflation, and political uncertainty ahead of the October general elections. Turning to Q2, available data suggests the economy continues to expand amid fiscal support and as the impact of the pandemic fades, with the manufacturing and services PMIs averaging higher in April–May relative to Q1, and the unemployment rate falling to a fresh multi-year low in April. That said, tighter monetary conditions and double-digit inflation will likely be weighing on activity somewhat.

Brazil Economic Growth

GDP growth is set to slow significantly this year from 2021. Investment is seen contracting amid higher interest rates and soft business sentiment, while growth in consumption and exports is set to slow. The outcome of October’s presidential elections, uncertainty over the fiscal position and the length of the commodity price boom are key factors to watch. FocusEconomics analysts see the economy expanding 1.0% in 2022, which is up 0.3 percentage points from last month’s forecast, and 1.2% in 2023.

Brazil Economy Data

2015 2016 2017 2018 2019
Population (million)203205207208210
GDP per capita (USD)8,8278,7749,9739,0408,760
GDP (USD bn)1,7961,8002,0631,8851,839
Economic Growth (GDP, annual variation in %)-3.5-3.31.31.31.1
Domestic Demand (annual variation in %)-6.3-4.81.51.91.7
Consumption (annual variation in %)-3.2-3.82.02.11.8
Investment (annual variation in %)-13.9-12.1-2.63.92.2
Industrial Production (annual variation in %)-8.3-6.62.90.8-1.1
Retail Sales (annual variation in %)-4.2-6.62.52.31.8
Unemployment Rate8.511.512.712.311.9
Fiscal Balance (% of GDP)-10.2-9.0-7.8-7.1-5.9
Public Debt (% of GDP)65.569.873.776.575.8
Money (annual variation in %)6.84.85.510.48.7
Inflation Rate (CPI, annual variation in %, eop)10.76.32.93.74.3
Inflation Rate (CPI, annual variation in %)9.08.73.43.73.7
Inflation (PPI, annual variation in %)11.37.7-2.58.89.6
Policy Interest Rate (%)14.2513.757.006.504.50
Stock Market (annual variation in %)-13.338.926.915.031.6
Exchange Rate (vs USD)3.963.253.313.884.02
Exchange Rate (vs USD, aop)3.343.483.193.653.95
Current Account (% of GDP)-3.0-1.3-0.7-2.2-2.7
Current Account Balance (USD bn)-54.5-24.2-15.0-41.5-49.5
Trade Balance (USD billion)19.547.667.058.048.0
Exports (USD billion)191185218239225
Imports (USD billion)171138151181177
Exports (annual variation in %)-15.1-3.017.59.9-5.8
Imports (annual variation in %)-25.2-19.89.620.2-2.1
International Reserves (USD)356365374375357
External Debt (% of GDP)18.618.115.417.017.6

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Value Change Date
Bond Yield6.79-0.82 %Dec 31
Exchange Rate4.02-0.13 %Jan 01

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