Brazil Economic Outlook
March 17, 2020The economy lost steam in sequential terms in Q4 2019. Fixed investment fell to an over three-year low, while consumer spending softened. Shifting to Q1, although growth prospects had looked optimistic at the start of the year, intensifying headwinds—mainly from the coronavirus outbreak—could have derailed momentum. The epidemic’s impact on the Chinese economy, commodity markets, and global financial conditions appears set to curtail Brazilian economic activity in H1, particularly in manufacturing, tourism, and trade. Moreover, the virus’ emergence in Brazil raises concerns that a full-on outbreak could cause the reform agenda to take a backseat. On 16 March, the government announced a USD 30 billion emergency bill to combat the fallout from the coronavirus. Measures include social assistance payouts, deferring corporate taxes and direct funds to mitigate the spread of the virus. That said, the government reaffirmed its commitment to its spending cap and noted that the package would be funded by cuts elsewhere in the budget.
Brazil Economic GrowthA more adverse global backdrop in H1 led many panelists to trim GDP forecasts for 2020 this month. Exports will likely remain hampered this year, while fiscal austerity will also drag on growth. That said, the economy is expected to strengthen, supported by low interest rates and the government’s reform agenda. Delayed reforms and a prolonged Covid-19 pandemic cloud the outlook. FocusEconomics analysts project growth of 1.9% in 2020, which is down 0.3 percentage points from last month’s estimate. In 2021, growth is seen accelerating to 2.4%.
Brazil Economy Data
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|Bond Yield||6.79||-0.82 %||Dec 31|
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Brazil Economic News
April 1, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, fell to 48.4 in March from 52.3 in February, marking the sharpest deterioration in operating conditions since February 2017.
April 1, 2020
Industrial production increased 0.5% on a month-on-month seasonally-adjusted basis in February, moderating from January’s revised 1.2% rise (previously reported: +0.9% month-on-month), but surprising market analysts who had expected a 0.4% decline in February.
March 27, 2020
Economic activity rebounded 0.2% in seasonally-adjusted month-on-month terms in January, contrasting December’s downwardly revised 0.4% decline (previously reported: -0.3% month-on-month).
March 25, 2020
Brazil’s current account deficit totaled USD 3.9 billion in February, widening from the USD 3.3 billion shortfall recorded in the same month of 2019, but was significantly less than January’s USD 11.9 billion deficit.
March 24, 2020
Retail sales, excluding cars and construction, fell 1.0% in seasonally-adjusted month-on-month terms in January, worsening from the revised 0.5% decline in December (previously reported: -0.1% month-on-month).