Brazil Economic Forecast

Brazil Economic Outlook

December 7, 2017

A pickup in household consumption and an improvement in investment kicked the economic recovery into a higher gear in Q3. Low interest rates, recovering business sentiment and stronger dynamics in the labor market are buttressing activity. Leading data for Q4, moreover, continues to point towards a steadily improving economy. The manufacturing PMI hit a multi-year high in November, and both consumer and business confidence rose in the same month. While the economy is finally growing after the worst recession in its modern history, many challenges lie ahead, and severe macroeconomic imbalances need to be addressed. The government is embroiled in a last-ditch effort to pass a watered-down version of the pension reform bill before the end of the year—a measure that was first presented almost a year ago. The bill needs a three-fifths supermajority to pass parliament, and it is uncertain if President Michel Temer has the support needed; the window for economic reforms in the country is quickly closing ahead of the October 2018 elections.

Brazil Economic Growth

Low interest rates, improving confidence and historically-low inflation should fuel an acceleration in growth next year. Structural reforms, however, are key to a sustainable recovery and the reversal of the untenable level of public debt. FocusEconomics see the economy growing 2.4% in 2018, which is up 0.1 percentage points from last month’s forecast. In 2019, growth is seen edging up to 2.5%.

Brazil Economy Data

20122013201420152016
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 %)1.93.00.5-3.8-3.6
Domestic Demand (annual variation in %)1.93.70.3-6.4-5.2
Consumption (annual variation in %)3.53.52.3-3.9-4.2
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 %)8.44.32.2-4.4-6.3
Unemployment Rate7.47.16.88.511.5
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 %)9.110.99.96.33.8
Inflation Rate (CPI, annual variation in %, eop)5.85.96.410.76.3
Inflation Rate (CPI, annual variation in %)5.46.26.39.08.7
Inflation (PPI, annual variation in %)9.15.12.211.37.7
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

ValueChangeDate
Bond Yield10.14-0.82 %Dec 06
Exchange Rate3.24-0.13 %Dec 06
Stock Market73,268-0.40 %Dec 06

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