Brazil Economic Forecast

Brazil Economic Outlook

May 14, 2019

The economy is expected to have disappointed again in the first quarter, after a feeble end to 2018. Economic activity, a GDP proxy, dropped in both January and February—raising the risk that GDP growth stumbled in Q1. Industrial output fell at the fastest pace in over two years, in part due to halts in iron ore production. More broadly, a less favorable external environment is also dampening activity and exports fell in Q1. Monthly data for Q2 is also soft: Consumer confidence and the manufacturing PMI slid in April. Against this backdrop, the government is under increasing pressure to move quickly with reforms. The critical pension reform made it through an initial first vote at the end of April; however, it still needs to clear multiple hurdles, including a special committee and votes in both houses of parliament. On 30 April, the government announced some minor measures aimed at reducing bureaucracy.

Brazil Economic Growth

Growth is seen staying tepid this year, plagued by a challenging environment both at home and abroad. While improved sentiment and accommodative monetary policy should help fuel a modest acceleration, reform uncertainty and subdued external demand will limit the uptick. An inflow of weak data led our panel to downgrade Brazil’s growth outlook for a third month in May. Met the why particular analysts project growth of 1.8% this year, which is down 0.3 percentage points from last month’s forecast, and 2.4% in 2020.

Brazil Economy Data

20132014201520162017
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 %)11.99.96.33.84.8
Inflation Rate (CPI, annual variation in %, eop)5.96.411.76.32.9
Inflation Rate (CPI, annual variation in %)6.26.39.08.73.4
Inflation (PPI, annual variation in %)5.12.211.37.7-2.5
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

ValueChangeDate
Bond Yield8.90-0.82 %May 13
Exchange Rate3.99-0.13 %May 13
Stock Market91,727-0.11 %May 13

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