Itaú BBA - A more volatile scenario

Brazil Scenario Review

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A more volatile scenario

September 6, 2018

After somewhat of a truce in July, international and domestic uncertainties hammered the BRL over the past month

Please open the attached pdf to read the full report and forecasts.

2Q18 GDP and 3Q18 indicators confirm the slowdown in economic activity. Our GDP growth forecasts are at 1.3% for 2018 and 2.0% for 2019, but worsening financial conditions add downside risk to our call.

We maintained our estimates for the primary budget deficit at 2.1% of GDP for 2018 and 1.6% of GDP for 2019. Fiscal rebalancing continues to depend on reforms.

Our year-end forecasts for the exchange rate remain at BRL 3.90/USD for 2018 and 2019. Domestic and international uncertainties pose a risk to this call.

Our estimates for the consumer price index IPCA are unchanged at 4.1% for 2018 and 4.2% for 2019.

Monetary policy: With plenty of spare capacity and a low inflation backdrop, the Monetary Policy Committee will likely keep the benchmark Selic rate stable at 6.50% at its September meeting.
 

Please open the attached pdf to read the full report and forecasts.



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