Brazil

Current Economic Outlook

In light of recent upbeat economic data, RGE has revised its Brazil GDP forecast upward to a negligible contraction of 0.1% y/y (‐0.25% y/y to 0.25% y/y range) from a decline of 1.1% y/y for 2009, and to 4.2% y/y (3.75% y/y to 4.75% y/y) from 3.7% y/y for 2010. Strong, counter‐cyclical fiscal and monetary efforts are behind the recovery and have translated into improvements in labor, retail sales and credit dynamics. Aggregate data for Q2 2009 indicated that the economic contraction lost momentum; Brazil’s economy contracted 1.2% y/y, compared to a contraction of 1.8% y/y in Q1. Private and public consumption showed resilience, rising to 3.2% and 2.2%, respectively. The improvement came despite a sharp drop in investment (‐17% y/y). On the external front, imports, which fell at a pace of 16.5% y/y, continued to decline faster than than exports, which fell at 11.4%—thus bolstering growth. On a seasonally‐adjusted basis, Brazil exited recession in Q2 2009, expanding 1.9% q/q on the back of private consumption (2.1% q/q) and exports (14% q/q).

Read the latest RGE Global Economic Update.