Brazil Economic Forecast

Brazil Economic Outlook

July 11, 2018

Economic data has taken a turn for the worse following a nationwide truckers’ strike in May and early June that crippled economic activity. Industrial production recorded the largest contraction in almost 11 years in May, and the manufacturing PMI plunged into contractionary territory in June. In addition, both business and consumer sentiment dropped in June, weighed on by the industrial action. All-in-all the strike and related spillover effects are expected to have dented GDP growth in the second quarter, following a slowdown in activity in the first quarter of the year. On the political front, October’s elections are coming into focus, and the lack of a strong centrist and reform-minded contender is casting a shadow on the country’s future and reverberating through financial markets. The Ibovespa index recorded its largest quarterly drop since 2015 in Q2, weighed down by political uncertainty as well as tightening global financial conditions. Early polls place far-right candidate Jair Bolsonero in the lead but show that former President Lula da Silva would be on top if he can contend.

Brazil Economic Growth

Brazil’s growth forecast was downgraded sharply for a second consecutive month this publication in the wake of the truckers’ strike. In addition, a less supportive external environment due to tighter global financial conditions and higher oil prices is also weighing on the country’s outlook. Met the why particular panelists cut 0.2 percentage points off Brazil’s growth forecast and now see the economy expanding 1.9% in 2018. Next year, GDP is seen growing 2.6%.

Brazil Economy Data

Population (million)201203204206208
GDP per capita (USD)12,27812,1168,7858,7209,896
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 %)5.8-4.2-13.9-11.3-1.8
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)-3.0-6.0-11.2-9.0-7.8
Public Debt (% of GDP)51.556.365.570.074.0
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)5.96.411.76.32.9
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)11.0011.7514.2513.757.00
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)-74.8-114.2-59.4-23.5-9.8
Trade Balance (USD billion)2.3-4.019.747.767.1
Exports (USD billion)242225191185218
Imports (USD billion)211229171138151
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

Bond Yield11.32-0.82 %Jul 17
Exchange Rate3.84-0.13 %Jul 17
Stock Market78,130-0.11 %Jul 17

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