Brazil Economic Forecast

Brazil Economic Outlook

June 11, 2019

GDP contracted in the first quarter of the year for the first time since the severe recession in 2015-2016. A breakdown by components revealed broad-based weakness in the economy, with uncertainty at home and abroad strangling fixed investment. In addition, exports plunged on lower mining sales amid troubles at Vale, the slowdown in global trade and collapse in demand from key trading partner Argentina. Available data for the second quarter points to lingering softness: Industrial production barely grew in April and both consumer and business confidence fell in May. Meanwhile, in June, the Supreme Court ruled that state-run firms do not need congressional approval to sell subsidiaries, a win for state-run oil company Petrobras and Bolsonaro’s government. The decision will allow Petrobras to sell around USD 27 billion of assets to help reduce its bloated debt.

Brazil Economic Growth

The recovery is seen languishing this year, picking up only modestly from 2018. Reform uncertainty will weigh on the business environment and dampen investment, while fiscal tightening and a tough external backdrop from rising protectionism and slowing global growth will also take their toll. This month, Brazil’s prospects were slashed for the fourth consecutive month. FocusEconomics analysts project growth of 1.4% this year, which is down 0.4 percentage points from last month’s forecast, and 2.3% in 2020.

Brazil Economy Data

Population (million)201203204206208
GDP per capita (USD)12,27812,1068,7858,7209,896
GDP (USD bn)2,4682,4551,7961,7972,055
Economic Growth (GDP, annual variation in %)3.00.5-3.5-3.51.0
Domestic Demand (annual variation in %)3.70.3-6.3-5.10.9
Consumption (annual variation in %)3.52.3-3.2-4.31.0
Investment (annual variation in %)5.8-4.2-13.9-10.3-1.8
Industrial Production (annual variation in %)2.1-3.0-8.3-6.42.5
Retail Sales (annual variation in %)4.32.2-4.4-6.32.1
Unemployment Rate7.16.88.511.512.7
Fiscal Balance (% of GDP)-3.0-6.0-10.2-9.0-7.8
Public Debt (% of GDP)51.556.365.570.074.0
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)5.96.410.76.32.9
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)10.0011.7514.2513.757.00
Stock Market (annual variation in %)-15.5-2.9-13.338.926.9
Exchange Rate (vs USD)2.362.663.963.253.31
Exchange Rate (vs USD, aop)2.162.353.343.483.19
Current Account (% of GDP)-3.0-4.2-3.3-1.3-0.5
Current Account Balance (USD bn)-74.8-104.2-59.4-23.5-9.8
Trade Balance (USD billion)2.3-4.019.747.767.1
Exports (USD billion)242225191185218
Imports (USD billion)240229171138151
Exports (annual variation in %)-0.2-7.0-15.1-3.117.6
Imports (annual variation in %)7.4-4.4-25.2-19.89.6
International Reserves (USD)359364356365374
External Debt (% of GDP)12.714.418.618.015.1

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Brazil Facts

Bond Yield7.88-0.82 %Jun 13
Exchange Rate3.85-0.13 %Jun 13
Stock Market98,774-0.40 %Jun 13

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