The city on the beach in Brazil

Brazil Economic Forecast

Brazil Economic Outlook

The economy defied market expectations in Q2, with both quarter-on-quarter and annual GDP growth markedly overshooting projections. That said, sequential growth slowed from Q1, partly due to a base effect and the cumulative 1,175 basis points of Central Bank hikes cooling the economy. From the production point of view, Q2’s slowdown was chiefly due to the agricultural sector declining amid the base effect from Q1’s record harvest. Regarding expenditure, private spending growth accelerated in Q2, supported by softer price pressures, a falling unemployment rate and fiscal stimulus—such as increases in minimum wages and the Bolsa Família welfare program. In Q3, the economy should be stable in sequential terms. That said, in early September, a cyclone hit the south of the country, causing heavy flooding and likely hampering activity at the tail-end of Q3.

Brazil Inflation

In July, inflation rose to a three-month high of 4.0% (June: 3.2%), surpassing the Central Bank (BCB)’s 3.25% target for this year and overshooting market expectations. Inflation will pick up in the remainder of 2023 from current levels due to lower interest rates, a weaker real, fiscal stimulus and higher fuel prices—with the latter partly due to the recent reinstatement of a federal tax.

This chart displays Economic Growth (GDP, annual variation in %) for Brazil from 2013 to 2022.

Brazil Economic Data

2018 2019 2020 2021 2022
Population (million) 208 210 212 213 214
GDP (USD bn) 1,917 1,873 1,477 1,649 1,921
GDP per capita (USD) 9,192 8,913 6,973 7,756 8,978
GDP (BRL bn) 7,004 7,389 7,610 8,899 9,915
Economic Growth (Nominal GDP, ann. var. %) 6.4 5.5 3.0 16.9 11.4
Economic Growth (GDP, ann. var. %) 1.8 1.2 -3.3 5.0 2.9
Domestic Demand (ann. var. %) 2.3 1.8 -4.3 5.8 2.2
Private Consumption (ann. var. %) 2.4 2.6 -4.6 3.7 4.3
Government Consumption (ann. var. %) 0.8 -0.5 -3.7 3.5 1.5
Fixed Investment (ann. var. %) 5.2 4.0 -1.7 16.5 0.9
Exports (G&S, ann. var. %) 4.1 -2.6 -2.3 5.9 5.5
Imports (G&S, ann. var. %) 7.7 1.3 -9.5 12.0 0.8
Industrial Production (ann. var. %) 0.8 -1.1 -4.7 4.2 -0.7
Retail Sales (ann. var. %) 2.3 1.8 1.2 1.4 1.0
Unemployment (% of active population, aop) 12.4 12.1 13.5 13.5 9.5
Fiscal Balance (% of GDP) -7.0 -5.8 -13.3 -4.3 -4.6
Public Debt (% of GDP) 75.3 74.4 86.9 78.3 72.9
Inflation (CPI, ann. var. %, eop) 3.7 4.3 4.5 10.1 5.8
Inflation (CPI, ann. var. %, aop) 3.7 3.7 3.2 8.3 9.3
SELIC Rate (%, eop) 6.50 4.50 2.00 9.25 13.75
10-Year Bond Yield (%, eop) 9.23 6.78 6.90 10.83 12.66
Exchange Rate (BRL per USD, eop) 3.88 4.02 5.19 5.57 5.28
Exchange Rate (BRL per USD, aop) 3.65 3.95 5.15 5.40 5.16
Current Account Balance (USD bn) -54.8 -68.0 -28.2 -46.4 -53.6
Current Account Balance (% of GDP) -2.9 -3.6 -1.9 -2.8 -2.8
Merchandise Trade Balance (USD bn) 46.6 35.2 50.4 61.4 61.5
Merchandise Exports (USD bn) 232 221 209 281 334
Merchandise Imports (USD bn) 185 186 159 219 273
Merchandise Exports (ann. var. %) 7.9 -4.6 -5.4 34.2 19.0
Merchandise Imports (ann. var. %) 16.6 0.3 -14.6 38.2 24.2
Foreign Direct Investment (USD bn) 78.2 69.2 37.8 46.4 87.2
International Reserves (USD bn) 375 357 356 362 325
International Reserves (months of imports) 24.3 23.0 26.9 19.8 14.3
External Debt (USD bn) 321 323 311 325 320
External Debt (% of GDP) 16.7 17.2 21.0 19.7 16.6

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