Brazil Economic Forecast

Brazil Economic Outlook

September 15, 2020

The economy shrank at a record-breaking pace in Q2 as social distancing measures slammed activity. The downturn came largely on the back of plunging household and capital spending as consumers and firms deferred non-essential purchases. However, exports rebounded in Q2, primarily driven by an upturn in commodity and food exports. Turning to Q3, incoming data suggests a recovery is taking hold. Both industrial production and retail sales expanded strongly in July as restrictions were gradually lifted, while the manufacturing PMI surged to a new record high in August, reflecting firming domestic activity. Meanwhile, on 1 September, the government extended the emergency stipend for low-income earners hit by the pandemic to the end of the year, although it was halved to BRL 300 per month (around USD 56). This will increase the cost of the program by BRL 100 billion to a total of BRL 350 billion.

Brazil Economic Growth

GDP is set to contract markedly this year as Covid-19 containment measures constrain domestic activity. A rising unemployment rate and income losses will shred household spending, while elevated uncertainty will hamper investment. Moreover, muted global demand will constrain the external sector. A prolonged health crisis and political tensions pose downside risks. FocusEconomics analysts see the economy contracting 5.9% in 2020, which is up 0.7 percentage points from last month’s estimate, before growing 3.6% in 2021.

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-
Domestic Demand (annual variation in %)-6.3-
Consumption (annual variation in %)-3.2-
Investment (annual variation in %)-13.9-12.1-
Industrial Production (annual variation in %)-8.3-
Retail Sales (annual variation in %)-4.2-
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 %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)11.37.7-
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-
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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Brazil Facts

Value Change Date
Bond Yield6.79-0.82 %Dec 31
Exchange Rate4.02-0.13 %Jan 01

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