Brazil Economic Forecast

Brazil Economic Outlook

May 15, 2018

A stream of downbeat data on the Brazilian economy has rolled in, suggesting that the recovery is weak. Retail sales decelerated and unemployment rose in the first quarter, boding poorly for private consumption in the period. Moreover, recent figures for the industrial sector have also been soft, with industrial production dropping in March, and the manufacturing PMI falling in April. In addition, both business and consumer sentiment dropped in April. To raise much-needed funding, the government is pushing ahead with the privatization of state utility Centrais Eletricas Brasileiras SA, more commonly known as Eletrobras, Latin America’s largest power company. On 9 May, a congressional commission voted in favor of a bill allowing the privatization, despite public opposition. Additional votes in the lower house and senate still need to be held to approve the privatization, which if implemented could boost the government’s efforts to meet fiscal targets.

Brazil Economic Growth

The economy is seen gaining steam this year thanks to low inflation, accommodative monetary policy and a rebound in investment. Although some progress has been made in improving government accounts, more tough reforms are needed to put public finances on a sustainable path, and a market-friendly outcome in October’s elections is key to supporting the economic outlook. FocusEconomics panelists see the economy expanding 2.5% in 2018, unchanged from last month’s forecast. In 2019, the economy is seen growing 2.8%.

Brazil Economy Data

Population (million)201203204206208
GDP per capita (USD)12,27812,1068,7928,731-  
GDP (USD bn)2,4682,4551,7981,799-  
Economic Growth (GDP, annual variation in %)3.00.5-3.8-3.6-  
Domestic Demand (annual variation in %)3.70.3-6.4-5.2-  
Consumption (annual variation in %)3.52.3-3.9-4.2-  
Investment (annual variation in %)5.8-4.2-13.9-10.2-  
Industrial Production (annual variation in %)2.1-3.0-8.3-6.5-  
Retail Sales (annual variation in %)4.32.2-4.4-6.3-  
Unemployment Rate7.16.88.511.5-  
Fiscal Balance (% of GDP)-3.0-6.0-10.2-9.0-  
Public Debt (% of GDP)51.556.365.569.9-  
Money (annual variation in %)  
Inflation Rate (CPI, annual variation in %, eop)5.96.410.76.3-  
Inflation Rate (CPI, annual variation in %)  
Inflation (PPI, annual variation in %)  
Policy Interest Rate (%)10.0011.7514.2513.75-  
Stock Market (annual variation in %)-15.5-2.9-13.338.9-  
Exchange Rate (vs USD)2.362.663.963.25-  
Exchange Rate (vs USD, aop)2.162.353.343.48-  
Current Account (% of GDP)-3.0-4.2-3.3-1.3-  
Current Account Balance (USD bn)-74.8-104.2-59.4-23.5-  
Trade Balance (USD billion)2.3-4.019.747.7-  
Exports (USD billion)242225191185-  
Imports (USD billion)240229171138-  
Exports (annual variation in %)-0.2-7.0-15.1-3.1-  
Imports (annual variation in %)7.4-4.4-25.2-19.8-  
International Reserves (USD)359364356365-  
External Debt (% of GDP)12.714.418.618.0-  

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Brazil Facts

Bond Yield10.42-0.82 %May 21
Exchange Rate3.68-0.13 %May 21
Stock Market81,815-0.40 %May 21

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