Brazil Economic Forecast

Brazil Economic Outlook

February 18, 2020

Momentum appeared to wane in the final quarter of last year after growth accelerated in the third quarter. Economic activity fell in December, while industrial output also declined in the same month. Moreover, retail sales in Q4 were disappointing, boding ill for private consumption in the quarter. Looking at the first quarter of 2020, survey data revealed confidence was mixed at the outset of the year: In January, consumers were more downbeat, although businesses were more optimistic. Meanwhile, merchandise exports plunged to an over four-year low in January on a sharp contraction in manufactured goods. The recent coronavirus outbreak could have a pronounced effect on external demand in Q1, particularly as commodity markets have been hard hit and China is a major trading partner for Brazil. Nevertheless, domestic demand is likely keeping growth afloat, thanks in part to a low interest-rate environment.

Brazil Economic Growth

The outlook for 2020 is favorable. Domestic demand should power the expansion, driven by improving economic sentiment and looser monetary policy. Conversely, fiscal tightening will dampen growth, while the external sector will likely remain lackluster. Delayed reform efforts ahead of local elections in October represents a risk to the outlook. FocusEconomics analysts project growth of 2.2% in 2020, which is unchanged from last month’s estimate. In 2021, growth is seen accelerating to 2.5%.

Brazil Economy Data

2014 2015 2016 2017 2018
Population (million)202203205207208
GDP per capita (USD)12,1708,8278,7749,9739,040
GDP (USD bn)2,4551,7961,8002,0631,885
Economic Growth (GDP, annual variation in %)0.5-3.5-
Domestic Demand (annual variation in %)0.3-6.3-
Consumption (annual variation in %)2.3-3.2-
Investment (annual variation in %)-4.2-13.9-12.1-2.63.9
Industrial Production (annual variation in %)-3.0-8.2-
Retail Sales (annual variation in %)2.2-4.4-
Unemployment Rate6.88.511.512.712.3
Fiscal Balance (% of GDP)-6.0-10.2-9.0-7.8-7.1
Public Debt (% of GDP)56.365.569.873.776.5
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)6.410.
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)11.7514.2513.757.006.50
Stock Market (annual variation in %)-2.9-13.338.926.915.0
Exchange Rate (vs USD)2.663.963.253.313.88
Exchange Rate (vs USD, aop)2.353.343.483.193.65
Current Account (% of GDP)-4.1-3.0-1.3-0.7-2.2
Current Account Balance (USD bn)-101.4-54.5-24.2-15.0-41.5
Trade Balance (USD billion)-4.019.547.667.058.0
Exports (USD billion)225191185218239
Imports (USD billion)229171138151181
Exports (annual variation in %)-7.0-15.1-
Imports (annual variation in %)-4.4-25.2-19.89.620.2
International Reserves (USD)364356365374375
External Debt (% of GDP)14.418.618.115.417.0

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Brazil Facts

Value Change Date
Bond Yield6.79-0.82 %Dec 31
Exchange Rate4.02-0.13 %Jan 01

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