Itaú BBA - Uncertainties hamper the recovery

Brazil Scenario Review

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Uncertainties hamper the recovery

julio 6, 2018

The continued deterioration of financial conditions led us to reduce our GDP growth forecasts to 1.3% in 2018 and 2.0% in 2019

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

 

We reduced our forecasts for GDP growth to 1.3% from 1.7% in 2018 and to 2.0% from 2.5% in 2019, given the unrelenting deterioration of financial conditions.

We maintained our estimate of a primary budget deficit at 2.1% of GDP in 2018, but our call for 2019 worsened to 1.6%, from 1.4%. Fiscal rebalancing continues to depend on reforms.

We revised our year-end forecasts for the exchange rate to BRL 3.90 per USD in 2018 and 2019 (from 3.70 previously) to reflecting greater internal and external risks.

We lifted our inflation estimates to 4.1% in 2018 and 4.2% in 2019, due to the new exchange rate forecasts and a larger-than-expected adjustment in electricity tariffs charged by São Paulo’s utility company, Eletropaulo.

As for monetary policy, greater uncertainties, anchored expectations and low inflation readings reinforce the outlook for stability in the benchmark Selic interest rate until year-end.


 

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



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