Brazil Economic Outlook
January 21, 2020In 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 GrowthThe 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%.
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|Bond Yield||6.79||-0.82 %||Dec 31|
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Brazil Economic News
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).
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.
January 10, 2020
Consumer prices jumped 1.15% in December over the previous month, up from November’s 0.51% increase.
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).
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.