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Brazil Economic Forecast

Brazil Economic Outlook

The economy likely posted a marginal quarter-on-quarter decline in Q3, following a surprisingly strong Q2 expansion that was driven in part by a bumper soybean harvest. Economic activity contracted 0.8% month on month in August (July: +0.4% s.a. mom). Moreover, both the services and the manufacturing PMIs were in contractionary territory on average in Q3. Meanwhile, monthly retail sales expanded marginally in July-August: Average inflation was higher in Q3 than in Q2, which limited the support lent to household spending from a falling unemployment rate, lower interest rates and fiscal stimulus—including higher Bolsa Família payments. In addition, the economy is expected to post another sequential decline in Q4, led by a slowdown in the all-important services sector.

Brazil Inflation

In September, headline inflation undershot market expectations but still rose to a seven-month high of 5.2% (August: 4.6%), markedly above the 3.25% target of the Central Bank of Brazil (BCB) for 2023; conversely, core inflation inched down to 6.0% (August: 6.1%). In 2024, inflation will slow from 2023 but remain above the 3.00% target for the year, partially on interest rate cuts.

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) 199 200 201 202 203
GDP (USD bn) 1,917 1,873 1,477 1,649 1,921
GDP per capita (USD) 9,627 9,363 7,347 8,162 9,458
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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