Brazil Economic Forecast

Brazil Economic Outlook

January 18, 2022

After the economy fell into recession in Q3, conditions will have likely remained muted in the final quarter of 2021. Economic activity contracted in October amid shrinking industrial output and weak retail sales. Moreover, consumer sentiment remained deeply pessimistic in Q4, while the manufacturing PMI ended the year at its lowest level since May 2020. Elevated inflation throughout the quarter—amid supply disruptions, spiking food prices and ever-high energy costs as the worst drought in nearly a century hinders hydroelectric capacity—has precipitated a sharp tightening of interest rates, likely further impacting domestic demand. Regarding the pandemic, while Covid-19 cases have spiked in early 2022 due to the arrival of the Omicron variant, the domestic vaccination campaign has accelerated markedly in recent months, which should reduce the health and economic impact of the latest outbreak.

Brazil Economic Growth

The economy is set to grow at the slowest rate in the region this year, as consumer and capital spending decelerate and export growth eases. Moreover, a fragile fiscal position, a heavy debt burden and political polarization in the run-up to October’s elections could all weigh on activity. Ongoing pandemic-related uncertainty remains a key risk to the outlook. FocusEconomics analysts see the economy expanding 0.9% in 2022, which is down 0.3 percentage points from last month’s forecast, and 1.8% in 2023.

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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