Brazil Economic Forecast

Brazil Economic Outlook

January 21, 2020

In the third quarter of 2019, the economy expanded at the fastest rate since Q1 2018 in quarter-on-quarter terms. Strengthening domestic demand lifted growth, underpinned by solid consumer spending; however, the external sector continued to drag on the economy. Data for Q4 suggests the economy ended 2019 on a positive, albeit softer, note. Economic activity increased at a solid pace in October–November and confidence continued improving in Q4. Nonetheless, merchandise exports fell in Q4 amid frail Chinese and Argentine demand, while industrial output declined in November, suggesting the sector remains on weak footing. In politics, the government recently postponed its administrative bill to overhaul public sector salaries and benefits. The move was the first hint at stalled reform momentum and was likely influenced by heightened public protests in the region. In other news, on 11 December S&P affirmed Brazil’s BB- credit rating and upgraded its outlook to positive, citing ongoing fiscal consolidation efforts.

Brazil Economic Growth

The outlook for 2020 is upbeat, with growth forecast to hit an over five-year high. Recovering economic sentiment and more accommodative monetary policy should power consumer spending and fixed investment. That said, the external sector will likely weigh on growth, while the risk of stalled reforms could hamper the ongoing recovery. FocusEconomics analysts project growth of 2.2% in 2020, which is up 0.1 percentage points from last month’s estimate. In 2021, growth is seen accelerating to 2.5%.

Brazil Economy Data

2014 2015 2016 2017 2018
Population (million)200202203205207
GDP per capita (USD)12,34212,1708,8278,7719,929
GDP (USD bn)2,4682,4551,7961,8002,053
Economic Growth (GDP, annual variation in %)3.00.5-3.5-3.31.1
Domestic Demand (annual variation in %)3.70.3-6.3-4.81.0
Consumption (annual variation in %)3.52.3-3.2-3.91.4
Investment (annual variation in %)5.8-4.2-13.9-12.1-2.5
Industrial Production (annual variation in %)2.1-3.0-8.2-6.42.5
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)51.556.365.569.974.1
Money (annual variation in %)10.710.16.84.85.5
Inflation Rate (CPI, annual variation in %, eop)5.96.410.76.32.9
Inflation Rate (CPI, annual variation in %)6.26.39.08.73.4
Inflation (PPI, annual variation in %)5.12.211.37.7-2.5
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)-3.2-4.1-3.0-1.3-0.4
Current Account Balance (USD bn)-79.8-101.4-54.5-24.0-7.2
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)12.714.418.618.115.5

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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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Brazil Economic News

  • Brazil: Economic activity quickens slightly in November

    January 16, 2020

    Economic activity rose 0.2% in seasonally-adjusted month-on-month terms in November, up from October’s revised 0.1% increase (previously reported: +0.2% month-on-month).

    Read more

  • Brazil: Retail sales disappoint in November

    January 15, 2020

    Retail sales, excluding cars and construction, increased 0.6% from the previous month in seasonally-adjusted terms in November, up from October’s 0.1% increase but notably underwhelming market analysts who had expected Black Friday sales to boost growth to 1.2%. The uptick in November was driven by stronger furniture and appliance spending—boosted by Black Friday promotions—and increased pharmaceutical and medical sales.

    Read more

  • Brazil: Inflation jumps in December

    January 10, 2020

    Consumer prices jumped 1.15% in December over the previous month, up from November’s 0.51% increase.

    Read more

  • Brazil: Industrial output declines in November

    January 9, 2020

    Industrial production fell 1.2% month-on-month in seasonally-adjusted terms in November, contrasting October’s upwardly revised 0.8% increase (previously reported: +0.3% month-on-month).

    Read more

  • Brazil: Manufacturing PMI ticks down in December

    January 2, 2020

    Conditions in Brazil’s manufacturing sector improved at the weakest pace in five months in December, with the manufacturing Purchasing Managers’ Index (PMI) edging down to 50.2 from 52.9 in November.

    Read more

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