Brazil Economic Forecast

Brazil Economic Outlook

September 12, 2018

GDP data confirmed that the recovery stuttered in the second quarter of the year, weighed on by economic disruptions from the truckers’ strike. Exports plunged due to transit disruptions, while household spending also slid in Q2, likely weighed on by deteriorating sentiment and a spike in inflation. More recent data for the third quarter continued to be downbeat, suggesting that a strong recovery has yet to materialize after the worst recession in the country’s modern history. Business and consumer confidence both fell in August amid a tense and uncertain political backdrop, and industrial production contracted in July. Moreover, the real plunged in recent weeks, boding poorly for inflationary pressures. Against a challenging economic backdrop, the country will head to the polls on 7 October in presidential and legislative elections. The battle for president remains crowded with a second-round vote nearly guaranteed. A centrist and reform-minded president is badly needed to navigate Brazil’s congress to pass tough reforms; however, Geraldo Alckmin, so far the most market-friendly candidate, is polling in fifth place.

Brazil Economic Growth

Brazil’s prospects were downgraded for the fourth month in a row following a modest Q2 GDP outturn. In addition, a less supportive global backdrop and the weakening of the real cloud the country’s outlook. A market-friendly outcome to the election remains crucial to ensuring a sustainable recovery. FocusEconomics panelists now see the economy growing 1.6% this year, down 0.1 percentage points from last month’s forecast. Next year, GDP is seen growing 2.5%.

Brazil Economy Data

20132014201520162017
Population (million)201203204206208
GDP per capita (USD)12,27812,1068,7858,7209,896
GDP (USD bn)2,4682,4551,7961,7972,055
Economic Growth (GDP, annual variation in %)3.00.5-3.5-3.51.0
Domestic Demand (annual variation in %)3.70.3-6.3-5.10.9
Consumption (annual variation in %)3.52.3-3.2-4.31.0
Investment (annual variation in %)5.8-4.2-13.9-10.3-1.8
Industrial Production (annual variation in %)2.1-3.0-8.3-6.42.5
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)51.556.365.570.074.0
Money (annual variation in %)10.99.96.33.84.8
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)-3.0-4.2-3.3-1.3-0.5
Current Account Balance (USD bn)-74.8-104.2-59.4-23.5-9.8
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)12.714.418.618.015.1

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Brazil Facts

ValueChangeDate
Bond Yield11.98-0.82 %Sep 20
Exchange Rate4.08-0.13 %Sep 20
Stock Market78,116-0.40 %Sep 20

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