Brazil Economic Forecast

Brazil Economic Outlook

February 13, 2018

Hard data for the fourth quarter suggests the recovery gained steam, after GDP grew at the fastest pace since Q1 2014 in the third quarter. Economic activity inched up in November, and industrial production grew at the fastest pace in over two years in December. In addition, the unemployment rate edged down in Q4, boding well for private consumption in the period. Early data for 2018 also points to improving economic conditions: Consumer sentiment rose to a multi-year high in January. Meanwhile, political events are dominating the discourse and generating uncertainty in financial markets. On 24 January, the Ibovespa—Brazil’s benchmark stock index—surged to a record high, after an appeals court held up former President Luiz Inácio Lula da Silva’s corruption sentence. The ruling could make Lula ineligible to run for presidency in October’s vote; however, Lula maintains his innocence and will likely keep fighting the charges. Heightened uncertainty in the run-up to the elections could generate volatility in Brazil’s exchange rate and in financial markets.

Brazil Economic Growth

Accommodative monetary policy and improved confidence should fuel high growth this year. Keeping the recovery on track will require a reform-minded president, however, and it is difficult to judge if the election will yield a market-friendly outcome. FocusEconomics panelists see the economy growing 2.5% in 2018, which is unchanged from last month’s forecast. In 2019, growth is seen edging up to 2.7%.

Brazil Economy Data

Population (million)199201203204206
GDP per capita (USD)12,36412,27812,1068,7928,731
GDP (USD bn)2,4642,4682,4551,7981,799
Economic Growth (GDP, annual variation in %)
Domestic Demand (annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)0.85.8-4.2-13.9-10.2
Industrial Production (annual variation in %)-2.32.1-3.0-8.3-6.5
Retail Sales (annual variation in %)
Unemployment Rate7.
Fiscal Balance (% of GDP)-2.3-3.0-6.0-10.2-9.0
Public Debt (% of GDP)53.751.556.365.569.9
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)7.2510.0011.7514.2513.75
Stock Market (annual variation in %)7.4-15.5-2.9-13.338.9
Exchange Rate (vs USD)2.052.362.663.963.25
Exchange Rate (vs USD, aop)1.952.162.353.343.48
Current Account (% of GDP)-3.0-3.0-4.2-3.3-1.3
Current Account Balance (USD bn)-74.2-74.8-104.2-59.4-23.5
Trade Balance (USD billion)19.42.3-4.019.747.7
Exports (USD billion)243242225191185
Imports (USD billion)223240229171138
Exports (annual variation in %)-5.3-0.2-7.0-15.1-3.1
Imports (annual variation in %)-1.47.4-4.4-25.2-19.8
International Reserves (USD)373359364356365
External Debt (% of GDP)13.312.714.418.618.0

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Brazil Facts

Bond Yield9.83-0.82 %Feb 22
Exchange Rate3.25-0.13 %Feb 22
Stock Market86,686-0.40 %Feb 22

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