Brazil Economic Forecast

Brazil Economic Outlook

January 16, 2018

The economy is gaining momentum despite political uncertainty. GDP growth accelerated in the third quarter thanks to faster household consumption and a smaller fall in investment. Available data for the fourth quarter points to another pick-up in activity, although growth is not yet firing on all cylinders. Retail sales rebounded in November, and exports grew by double digits in December; however, consumer confidence edged down in the same month. In the political arena, the government postponed a vote on the crucial pension reform bill to February, to have more time to generate support for the bill. The move underscores the difficulty President Michel Temer is having in pushing through badly needed, but unpopular, measures to put government finances on a sustainable path. Legislation is expected to come to a standstill in the spring, as the October 2018 elections approach; the economy needs a reform-minded president to address lingering macroeconomic imbalances. Former President Luiz Inacio Lula da Silva, who opposes Temer's policies, is currently leading in early polls, but it is uncertain if he will be eligible to run due to corruption charges.

Brazil Economic Growth

The recovery is seen gaining speed this year, thanks to higher household spending and investment growth. Politics and a lack of reforms are the largest risks to Brazil’s economic trajectory, and are clouding the country’s outlook. Met the why particular panelists see the economy growing 2.5% in 2018, which is up 0.1 percentage points from last month’s forecast. In 2019, growth is seen edging up to 2.6%.

Brazil Economy Data

20122013201420152016
Population (million)199201203204206
GDP per capita (USD)12,36412,27812,1168,7928,731
GDP (USD bn)2,4642,4682,4551,7981,799
Economic Growth (GDP, annual variation in %)1.93.00.5-3.8-3.6
Domestic Demand (annual variation in %)1.93.70.3-6.4-5.2
Consumption (annual variation in %)3.53.52.3-3.9-4.2
Investment (annual variation in %)0.85.8-4.2-13.9-11.2
Industrial Production (annual variation in %)-2.32.1-3.0-8.3-6.5
Retail Sales (annual variation in %)8.44.32.2-4.4-6.3
Unemployment Rate7.47.16.88.511.5
Fiscal Balance (% of GDP)-2.3-3.0-6.0-11.2-9.0
Public Debt (% of GDP)53.751.556.365.569.9
Money (annual variation in %)9.111.99.96.33.8
Inflation Rate (CPI, annual variation in %, eop)5.85.96.411.76.3
Inflation Rate (CPI, annual variation in %)5.46.26.39.08.7
Inflation (PPI, annual variation in %)9.15.12.211.37.7
Policy Interest Rate (%)7.2511.0011.7514.2513.75
Stock Market (annual variation in %)7.4-15.5-2.9-13.338.9
Exchange Rate (vs USD)2.052.362.663.963.25
Exchange Rate (vs USD, aop)1.952.162.353.343.48
Current Account (% of GDP)-3.0-3.0-4.2-3.3-1.3
Current Account Balance (USD bn)-74.2-74.8-114.2-59.4-23.5
Trade Balance (USD billion)19.42.3-4.019.747.7
Exports (USD billion)243242225191185
Imports (USD billion)223211229171138
Exports (annual variation in %)-5.3-0.2-7.0-15.1-3.1
Imports (annual variation in %)-1.47.4-4.4-25.2-19.8
International Reserves (USD)373359364356365
External Debt (% of GDP)13.312.714.418.618.0

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Brazil Facts

ValueChangeDate
Bond Yield11.14-0.82 %Dec 06
Exchange Rate3.24-0.13 %Dec 06
Stock Market73,268-0.11 %Dec 06

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