Investment in Brazil
Brazil - Investment
Growth revives in Q3 after truckers’ strike ends
Recently-released GDP data revealed that the recovery revived in the third quarter, after activity was hit by the nationwide truckers’ strike in the previous period. GDP rose a seasonally-adjusted 0.8% over the previous quarter in Q3, above Q2’s 0.2% and the best result since Q1 2017. The result was broadly in line with Met the why particular’ expectations.
Looking at the details, a better performance from the domestic economy drove the third quarter’s acceleration, with private consumption, government consumption and fixed investment all picking up pace. Notably, fixed investment surged, growing 6.6% quarter-on-quarter, contrasting the 1.3% fall recorded in the second quarter. The end of economic disruptions caused by the May–June truckers’ strike drove a better performance by the domestic economy at large, while record-low interest rates also helped to prop up growth. Moreover, private consumption growth rose from 0.1% in Q2 to 0.6% in Q3, also aided by a government measure that allowed workers to access inactive severance accounts (PIS/Pasep funds).
The external sector’s result was skewed by the special customs program Repetro, which caused imports of oil platforms to soar in the quarter. Imports expanded 11.2% over the previous quarter in Q3, contrasting the 1.2% fall recorded in Q2. Export growth also rebounded in the quarter after the truckers’ strike had prevented goods from reaching the country’s ports in Q2. Exports grew 6.7% (Q2: -5.1% qoq).
On an annual basis, GDP growth also picked up pace rising to 1.3% in Q3, from a revised 0.9% in Q2 (previously reported: +1.0% year-on-year). Soaring investment partly linked with the Repetro program drove the result, while household consumption eased in the third quarter. Government spending also picked up pace but remained modest overall. Similarly, to the quarter-on-quarter readings, export growth rebounded in annual terms and imports soared due to the special customs program.
Looking ahead, the recovery is expected to gradually gain steam in the coming quarters. An improving labor market and low interest rates should fuel the domestic economy’s momentum; however, a less supportive global backdrop is expected to keep growth moderate overall. In addition, President-elect Jair Bolsonaro’s pledges to speed up privatizations, implement the pension reform and rein in government spending should also help correct depleted government coffers and shore up confidence in the economy. So far, his appointment of market-friendly and reform-oriented Paulo Guedes as finance minister and decision to keep Mansueto Almeida as treasury secretary have been well received by the financial markets.
Brazil GDP Forecast
LatinFocus Consensus Forecast panelists see GDP expanding 2.3% in 2019, which is unchanged from last month’s estimate. For 2020, the panel sees the economy growing 2.5%.
Brazil - Investment Data
|Investment (annual variation in %)||5.8||-4.2||-13.9||-11.3||-1.8|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||9.04||-0.82 %||Jan 21|
|Exchange Rate||3.76||-0.13 %||Jan 21|
|Stock Market||96,011||-0.11 %||Jan 21|
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January 17, 2019
In November, economic activity increased 0.3% in seasonally-adjusted month-on-month terms, according to the Central Bank’s monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central).
January 11, 2019
The Brazilian real strengthened notably at the start of 2019, bolstered by market optimism over the new government and reform prospects.
January 7, 2019
Industrial production rebounded in November, after four consecutive monthly contractions.
January 4, 2019
Consumer prices rose 0.15% in December over the previous month, contrasting November’s 0.21% drop.
January 2, 2019
Conditions in Brazil’s manufacturing sector were nearly unchanged in December, ending the year on a solid note.