Brazil Economic Forecast

Brazil Economic Outlook

November 10, 2020

After GDP plunged at a record pace in Q2, the economy likely rebounded in Q3. Activity in the goods sector seemingly bounced back, with industrial production growing strongly in the quarter and retail sales climbing in July–August, bolstered by the emergency pandemic payments. Moreover, the manufacturing PMI remained firmly in expansionary territory in Q3, while confidence in the industrial sector rebounded in September. Turning to Q4, incoming data paints a mixed picture. Both the manufacturing PMI and business confidence hit new record highs in October, boding well for investment. However, consumer sentiment turned more pessimistic in the same month, hinting that the recovery could be losing momentum. In other news, on 3 November, the Senate passed the central bank autonomy bill, which would limit political interference in monetary policy. The bill still requires approval from the lower house of Congress, however.

Brazil Economic Growth

After this year’s projected contraction due to the Covid-19 hit, the economy is seen rebounding strongly in 2021 as domestic and foreign demand recover. However, the gradual reducing of fiscal stimulus as the coronavirus shock fades, an elevated unemployment rate and ballooning public debt represent downside risks to the outlook. FocusEconomics analysts see the economy rebounding and growing 3.4% in 2021, which is down 0.1 percentage points from last month’s forecast. In 2022, panelists see GDP growth at 2.5%.

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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