Brazil Economic Forecast

Brazil Economic Outlook

October 11, 2021

After the economy shrank slightly in sequential terms in Q2, available data for Q3 paints a mixed picture. While overall activity grew at a robust rate in July, the economy appears to be operating at two different speeds. Externally, exports have been supported by rising commodity prices and strong foreign demand. However, domestically, industrial production shrank in July–August and retail sales tumbled at the fastest pace in eight months in August amid declining consumer confidence, likely pointing to muted household spending in the quarter. Moreover, business confidence fell throughout the quarter, likely reflecting concerns around the political situation: While President Bolsonaro has toned down his anti-democratic rhetoric in recent weeks, tensions remain high ahead of next year’s general elections.

Brazil Economic Growth

Economic activity is projected to rebound this year, before growth slows in 2022 as domestic demand normalizes and export growth falls from this year’s estimated jump. Moreover, frail fiscal accounts, a heavy debt burden and political polarization could weigh on activity, while uncertainty over the pandemic amid the spread of new Covid-19 strains further clouds the outlook. FocusEconomics analysts see the economy expanding 5.0% in 2021 and 1.9% in 2022, which is down 0.3 percentage points from last month’s forecast.

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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