Itaú BBA - Evening Edition – Brazilian pension reform proposal confirms expectations

Latam Talking Points

< Volver

Evening Edition – Brazilian pension reform proposal confirms expectations

febrero 20, 2019

The reform will now be examined by the Constitution and Justice Committee (CCJ) as well as special commissions

Talk of the Day
 

Brazil

The official pension reform proposal was sent to Congress today. As it was previously indicated, the bill sets the minimum retirement age of 65 years for men and 62 years for women, with a transition period of 12-14 years. According to the government’s estimates, the proposal will provide savings of around BRL1.16 trillion in the next ten years, similar to markets expectations. The reform will now be examined by the Constitution and Justice Committee (CCJ) as well as special commissions, with an expected approval on the Lower House only by the end of the first half of this year or the beginning of the second. We will publish a report with further details on the proposal.

FGV has released its industry survey preview, suggesting a small improvement for the sector - following declines in 3Q18 and stagnation in 4Q18. The results are consistent with a weak recovery in 1Q19.            

Confidence in the industrial sector rose 0.9pp to 99.1 in February. The index is now 1.9 pp below the 1Q18 average. The improvement was driven by better current conditions (up 2.0 pp to 99.0), while expectations fell 0.3 pp to 99.2. The preview of the capacity utilization (NUCI) rose by 0.4pp to 74.7, following four consecutive declines and 2.4pp accumulated drop between Sep-18 and Jan-19. 

Looking forward, we expect the improvement in financial conditions since October to boost further the industrial sector. The final survey (including additional data) will be released on February 26.

Tomorrow’s Agenda: February’s IPCA-15 inflation will be released at 9:00 AM. We forecast a 0.30% monthly increase, leading the 12-month reading to 3.68% (from 3.77% in January). 

Argentina

Tomorrow’s Agenda: The trade balance for January will come out at 4:00 PM. We forecast a USD 500 million surplus in January (up from a deficit of USD 900 million registered in the same month of 2018). 

Mexico

Tomorrow’s Agenda: At 12:00 PM, the Central Bank will publish the minutes of February’s monetary policy meeting (held two weeks ago), when Board members voted unanimously to leave the policy rate unchanged at 8.25%.

Peru

Tomorrow’s Agenda: The Central Bank will publish 4Q18’s GDP growth, including the demand-side breakdown. According to the already-released monthly GDP, activity grew 4.7% yoy in 4Q18 (from 2.3% in the 3Q18).



< Volver