Itaú BBA - Gradual rebound in economic activity as fiscal expectations improve

Brazil Scenario Review

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Gradual rebound in economic activity as fiscal expectations improve

January 11, 2019

We forecast a shrinking primary budget deficit, from 1.7% of GDP in 2018 to 1.3% in 2019 and 0.8% in 2020

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

We forecast a shrinking primary budget deficit, from 1.7% of GDP in 2018 to 1.3% in 2019 and 0.8% in 2020. This scenario is strictly dependent on the approval of a social security reform that generates a fiscal impact similar to that of the proposal discussed in Congress over the last two years.

We estimate 2.5% GDP growth for 2019 and 3.0% for 2020.

We maintained our year-end FX forecasts at 3.90 BRL/USD for 2019 and 2020.

We maintained our inflation forecasts at 3.9% for 2019 and 4.0% for 2020.

The Selic benchmark interest rate is set to remain stable through 2019, but the Monetary Policy Committee is expected to preserve its flexibility to react to eventually persistent deviations from its base-case scenario.

 

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



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