Brazil Economic Forecast

Brazil Economic Outlook

October 9, 2018

Subdued economic data is rolling in for the Brazilian economy as the country’s crucial election season is in full swing. Business and consumer confidence dropped in September in the run-up to the turbulent vote, while industrial production plunged in August. Moreover, economic stress in key trading partner, Argentina, is hampering export growth, while political uncertainty has sparked volatility in the country’s financial markets. The soft third quarter data comes after an already weak Q2 GDP print due to economic disruptions from a nationwide truckers’ strike. Against a sour economic backdrop, voters went to the polls on 7 October in presidential and legislative elections. Far-right and outsider candidate Jair Bolsonaro came out resoundingly on a top with a better than expected 46% of the vote. Nevertheless, as Bolsonaro failed to secure over half of the vote, he will face second place Workers’ Party candidate Fernando Haddad in a run-off election on 28 October.

Brazil Economic Growth

Met the why particular panelists downgraded Brazil’s 2018 and 2019 prospects this month. Rising inflation partly stemming from a weak real is expected to take a bite out of households’ purchasing power and impel the Central Bank to tighten rates, removing support for the economy. Although the continuation of tough economic reforms remains critical for the country’s outlook, there remains a degree of uncertainty whether the incoming president will have the ability and willpower to do this. The economy is seen growing 1.5% in 2018 and 2.3% in 2019, which is down 0.2 percentage points from last month’s projections.

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 Yield11.48-0.82 %Oct 18
Exchange Rate3.72-0.13 %Oct 18
Stock Market83,847-0.11 %Oct 18

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