Data continue to point to a moderate pace of recovery in economic activity.
GDP grows 0.4% in the second quarter, but this does not indicate a trend change, in our view.
Amid weak activity, well-behaved inflation and the first vote on the pension reform in Congress, the Copom cut the Selic rate by 50 bps.
Central Bank’s forecasts indicate new easing cycle in 2019
For 2Q19, our preliminary forecast is a modest GDP growth of 0.1% qoq/sa
The next step is the discussion of the content in the Lower House’s Special Committee.
The new pension reform proposal implies savings of 2.7% of GDP by 2027 (or BRL 1.1 trillion accumulated over 10 years).
Recent activity data point to a moderate economic performance in 4Q18.
Copom keeps the Selic stable at 6.5%. Activity with weak results, but confidence advances. Bolsonaro takes office as president of the Republic
Confidence indexes improved significantly, while previous months’ available activity data continue to show a slow recovery pace
Jair Bolsonaro won the presidential election with 55% of the valid votes, while parties usually considered more traditional lost seats in the congress.
Without reforms, fiscal results will begin to deteriorate again
Polls consolidate Bolsonaro (PSL) in the lead and Haddad (PT) ranking second in the presidential race
The candidacy of former President Lula (PT) was rejected during the TSE session on August 31
This coalition will have about 50% of available radio and TV campaign time
Voting intentions for the main pre-candidates declined
At its last meeting, the Central Bank of Brazil indicated that the monetary easing cycle is near its end.
A federal court (TRF-4) rejected former President Lula’s appeal and increased his sentence to 12 years and one month.
The Senate approved MP 777/2017, creating the long-term rate TLP to replace the TJLP.
The next step is the voting of the base text on the Senate, possibly next week.
The reform changes the labor legislation in more than one hundred points, aiming to make the labor market more flexible.
High political uncertainty contributes to postpone discussions about the pension reform in Congress.
The latest developments led ratings agencies to change Brazil’s sovereign outlook to negative.
The Social Security report was issued and included changes that diluted the reform’s.
The monetary authority indicates the possibility of a “moderate” acceleration in the pace of monetary easing.
The Lower House Special Committee began its analysis of the Social Security Reform and its progress will continue in March.
The Committee justified the acceleration based on data revealing weaker economic activity and lower-than-expected inflation.
The next step in the fiscal reform agenda, the Social Security reform, is successfully advancing in the Lower House.
In a first round of voting, the Senate approved the Constitutional Amendment Bill that sets a cap on public spending growth.
The Lower House approved the measure by a wide majority: 366 votes in the first round of voting and 359 in the second.
If approved, the measures will cause federal expenditure to decline as a percentage of GDP in the coming years.
The Senate voted in favor of impeachment, and Temer has been sworn in as Brazil’s president.
Maia replaces Eduardo Cunha (PMDB-RJ) as Speaker of the House, who had stepped down from the post.
The government has submitted its public spending-cap bill to Congress and concluded renegotiations of state debts.
Michel Temer’s interim administration has been sworn in and is proposing fiscal reforms to rein in public spending.
The Lower House voted to approve the impeachment of President Dilma Rousseff. The motion now advances in the Senate.
Impeachment proceedings against President Rousseff have begun.
Brazil’s credit rating was again downgraded by the rating agencies
In a context of worsening global markets, local markets also suffered a significant decline.
The Supreme Court has set forth the rules for the impeachment process. Also, Nelson Barbosa became the new Finance Minister.
The government had some victories, but again it faces an uncertain environment in Congress
The economy continues to struggle, with rising unemployment and inflation.
Government announced new fiscal package to achieve a primary surplus target in 2016. Congressional Approval could be challenging.
The government submitted a budget proposal with a primary deficit which is insufficient to stabilize the public debt.
The government significantly reduced its primary surplus targets, and S&P lowered Brazil’s outlook from stable to negative.
Key measures for the fiscal adjustment have advanced, but so have rules that increase pension spending.
GDP declined in the first quarter, and a sharper slide is likely in the second quarter.
Markets improved with the perception that adjustments are moving forward.
GDP Grows 0.3% in 4Q14 In the full year, growth stood at 0.1%
Economic activity deteriorates and points to a scenario of negative GDP growth this year.
Rainfall levels were quite weak in January, at 64% of their historical average
The long-awaited economic adjustment has begun. The National Monetary Council raised the Long-Term Interest Rate (TJLP) by 0.50 pp, to 5.50%
The government named Joaquim Levy and Nelson Barbosa to the Finance and Planning Ministries
In the run-off held on October 26, President Dilma Rousseff, from the PT party, was reelected with 52% of the valid votes
Waiting for the elections
According to the latest Datafolha poll, Marina Silva is tied with President Dilma Rousseff in the first round, with 34%
The Copom signaled flat interest rates but announced stimulus to credit.
The economic slowdown was more intense, and the government announced measures to stimulate growth.
We revised our forecast for GDP growth this year to 1.0%
The Brazilian Central Bank increased the Selic rate once again in April
Brazil’s credit rating was downgraded by Standard & Poor's, but remains one notch above investment grade.
The Brazilian economy in February 2014
The Brazilian economy in January 2014
The Brazilian economy in December 2013
A highlight was the progress in concession auctions for airports and highways, which brought in higher-than-expected financial results.
Positive Surprises, but Fundamentals Suggest a Gradual Economic Recovery
Signs of stabilization in the economy and in the FX market.
We incorporated in our scenario an adjustment in fuel prices before the end of 2013.
The Central Bank announced a program of daily auctions in the FX market.
Business and consumer confidence fell in July because of economic and political uncertainty.
The real depreciated, because of higher U.S. rates, slow growth in China and domestic issues.
The Brazilian economy grew below expectation in 1Q13 but the Central Bank accelerated the pace of interest rate hikes due to inflationary pressures.
The government signaled that fiscal policy will expand further. Foreign direct investment inflows are no longer enough to finance the current account deficit.
Inflation remains under pressure, but some relief through tax cuts for basic food staples is likely to occur.
The Central Bank reinforced its message against inflation, saying that the interest rate is the adequate tool to fight it.
Consumer spending dynamics are still favorable, but companies remain cautious in their investment decisions.
The Brazilian economy proved to be harder to manage, with simultaneous concerns involving weak growth and inflation.
The economic recovery disappointed in the third quarter, increasing the doubts about its sustainability.
Credit volumes are growing moderately and the Central Bank has completed the monetary easing cycle.
A modest recovery persists. Consumption was positive, but industrial production has not reacted so far. Inflation is trending slightly down.