Brazil: Business sentiment drops in November
November 30, 2010
Brazilian business sentiment fell to a one-year low in November. The index of business confidence published by the Getulio Vargas Foundation (FGV, Fundacao Getulio Vargas) dropped a seasonally adjusted 1.1% over October to 112.7 points. The deterioration in business confidence was mainly driven by a less optimistic assessment of the economic situation for the next six months, as the sub-index fell 1.9% to 110.7 points in November. In the same vein, businesses are also slightly less upbeat about the current situation, as the sub-index inched down 0.3% to 114.7 points in November. Business confidence has remained above the 100-point threshold that separates optimism from pessimism since August 2009. At the current level, confidence is 2.9% higher than in the same month last year, but is falling further below the peak of 116.5 points recorded in March. Optimism in the business community has been crucial for the recovery of fixed investment that constituted an important growth driver since the second quarter of 2009. If the downward trend in business sentiment is confirmed in subsequent quarters, investment growth may weaken going forward.