Brazil
View:
July 23, 2024 4:07 PM UTC
The Brazilian government will implement BRL 15 billion in contingency expenditures to meet fiscal targets, aiming for a 0.25% GDP primary deficit in 2024. This move, though addressing fiscal issues, pursues the lower target band and may undermine fiscal credibility. The contingency is due to revenue
July 17, 2024 6:52 PM UTC
We decomposed inflation in Brazil and Mexico using a Vector Autoregressive (VAR) Model, focusing on Imported Inflation, Demand, Supply, and Monetary Policy. Our analysis from 2003 to 2024 for Brazil and 2005 to 2024 for Mexico shows Brazil's inflation was primarily driven by supply and imported infl
July 10, 2024 5:11 PM UTC
The IBGE's June CPI figures show a 0.21% monthly increase, below market expectations. The Y/Y index rose to 4.2%, driven by increases in potatoes, milk, and coffee. The floods in the South had a minimal impact. Health and Housing saw modest rises, while core CPI remained stable. Despite potential ri
July 3, 2024 1:29 PM UTC
From 2012 to 2019, Brazil’s labor force participation grew, peaking at 63.7% in December 2019. Post-pandemic, it has fallen to 62.1%, influenced by early retirements, fiscal aid, and demographic shifts as more people enter age groups with lower participation. Intragroup effects mainly drive partic
July 1, 2024 8:05 AM UTC
Enhancing fiscal credibility is key post-election in India and S Africa, but also for Brazil. India, will do this in the 3 week of July, but S Africa needs to move from ANC/DA led coalition optimism to reality quickly. Brazil needs to stop the vicious circle of sentiment building up on fiscal slip
June 27, 2024 1:28 PM UTC
The Brazilian government has revised the BCB's inflation targeting framework, effective January 2025, to a continuous target system. If inflation exceeds the target bands for six consecutive months, the BCB must explain the discrepancy. The 3.0% target with 1.5% bands remains unchanged, alleviating
June 26, 2024 1:32 PM UTC
The Brazilian Central Bank maintained the SELIC rate at 10.5%, emphasizing a unanimous, hawkish stance on inflation. Markets question BCB's inflation control with upcoming leadership changes. External uncertainties, domestic consumption surprises, and rising inflation expectations were highlighted.
June 25, 2024 10:15 AM UTC
• The global economy is showing signs of healing, as inflation comes back towards targets and growth recovers momentum in some economies. Nevertheless, the cyclical headwind of lagged monetary tightening remains in DM countries, and will likely be one of the forces slowing the U.S. economy
June 25, 2024 8:05 AM UTC
We see Fed rate cuts from September starting to soften USD strength into year end and 2025. Beneficiaries will include currencies with inflation moving towards target and high real rates or, alternatively, undervalued currencies. This should benefit the Brazilian Real (BRL) and Indonesian Rupiah
June 25, 2024 7:05 AM UTC
• U.S. equities are overvalued and waiting for earnings growth to catch-up, which leaves the market choppy, directionless and vulnerable to intermittent 5% corrections. Our forecast slowing of the U.S. economy before Fed rate cuts or nervousness about the post-election prospects are potenti
June 24, 2024 6:00 PM UTC
· Brazil and Mexico growth will decelerate from the growth rates in 2023. The stronger basis of comparisons in 2023 and the tight monetary policy will diminish growth during 2024. Brazil robust Agricultural growth will not repeat in 2023 while Mexico is on the limit of growing due to a
June 19, 2024 10:17 PM UTC
The Brazilian Central Bank kept the policy rate at 10.5%, citing economic uncertainty and a need for caution. Inflation expectations for 2025 are 3.8%, above the 3.0% target. Political interference concerns persist, but the unanimous decision indicates a technical approach. The BRL's depreciation ma
June 17, 2024 2:34 PM UTC
The Brazilian Central Bank (BCB) is expected to maintain the SELIC rate at 10.5% amid external sector volatility, stubborn service inflation, and deteriorating inflation expectations. A hawkish majority on the board suggests a pause despite potential for cuts. Risks include rising food prices post-f
June 11, 2024 1:55 PM UTC
Brazil’s CPI grew by 0.46% in May, exceeding expectations. Year-over-year CPI rose to 3.9%, driven by significant increases in food and beverage prices. Services inflation also increased. Strong labor market demand and supply disruptions from floods are pushing prices up. With the BRL devaluation
June 4, 2024 5:21 PM UTC
The Brazilian GDP grew by 0.8% in Q1 2024, surpassing market expectations but below forecast. Internal demand, fueled by higher consumption and government initiatives, drove the growth. Consumption rose by 1.5%, and investments surged by 4.4%. Services and Agriculture sectors showed notable growth,
May 23, 2024 3:07 PM UTC
Brazil's Q1 2024 economic performance shows a promising 1% GDP growth, driven by a 3.5% year-over-year activity increase. Retail trade grew by 2.5%, reflecting strong internal demand and improved labor market conditions. Industrial production saw a modest 0.3% growth, with manufacturing stagnation o
May 16, 2024 1:07 PM UTC
Unprecedented floods in Rio Grande do Sul, a state that contributes 6.4% to Brazil's GDP and 13.3% to its agricultural production, have submerged several cities. The immediate halt in economic activity may reduce Brazil's Q2 GDP by up to 0.4%. The federal government is increasing aid, potentially ra
May 14, 2024 2:35 PM UTC
The Brazilian Central Bank's latest meeting revealed a shift in forward-guidance, reducing the cut from 50bps to 25bps. While no immediate actions were taken, the minutes highlighted worsening conditions in three key areas: External Environment, Fiscal, and Economic Activity. Despite split votes on
May 9, 2024 1:11 PM UTC
The Brazilian Central Bank convened, opting against a 50bps cut, reducing it to 25bps, lowering the policy rate to 10.5%. A split vote ensued, with 25bps winning 5x4. The communique, vague possibly due to board division, noted labor market and economic activity surpassing expectations. Foreign marke
May 6, 2024 1:02 PM UTC
The Brazilian Central Bank (BCB) convenes on May 8 to set the policy rate. Previous forward guidance hinted at a 50bps cut in May, but recent statements from BCB President Roberto and some weakness in the BRL have shifted expectations to a 25bps cut. However, we anticipate the BCB maintaining a 50bp
May 3, 2024 10:45 AM UTC
While U.S. economic developments, plus Fed policy prospects, will be important in terms of EM currency developments, domestic politics and fundamentals will also be decisive. These can keep the South Africa Rand volatile in the remainder of 2024, given the risk of a coalition government and African
May 2, 2024 2:27 PM UTC
Moody’s upgraded Brazil's outlook to positive from stable, maintaining its Ba2 rating, signaling a potential move to Ba1 soon. Strong growth prospects, attributed to institutional reforms, drove this shift. Despite lingering doubts, improved fiscal conditions and anticipated tax reform are bolster
April 26, 2024 1:21 PM UTC
Despite the BCB's initiation of the cutting cycle, credit is anticipated to decelerate due to monetary policy lags. Enterprises face the most significant impact, with nominal growth dropping to 4.1% in February from 12.1% a year prior. While household credit growth slows to 10.4% annually from 17%,
April 24, 2024 3:19 PM UTC
Our analysis delves into recent trends in the Brazilian labor market, focusing on CPI and wage inflation. Utilizing a model akin to Ghomi et al. (2024) and Blanchard and Bernanke (2023), we dissect recent spikes in wage inflation and CPI growth. Notably, our findings suggest that recent wage spikes
April 18, 2024 1:39 PM UTC
The Brazilian government has revised its budget targets for 2025 and 2026, lowering the deficit to 0% and a 0.25% surplus in 2025 and 2026 respectively, from 0.5% surplus in 2025 and 1% in 2026. However, reliance on revenue increases poses challenges amid resistance from Congress. Despite reduced ta
April 10, 2024 2:57 PM UTC
The latest CPI data from Brazil reveals a modest increase of 0.16% (m/m) in March, slightly below market forecasts. Despite this, the year-on-year CPI has dropped to 3.9%, remaining within the BCB bands but above the central target. Notably, the Food and Beverages group saw the most significant rise
April 3, 2024 2:31 PM UTC
In 2023, Brazil witnessed a significant fiscal decline, with the GDP surplus of 0.5% in 2022 turning into a 2.1% deficit, surpassing the targeted 0.5% deficit set by the new fiscal rule. Despite measures aimed at reinstating fiscal sustainability, immediate adjustments are unlikely. The deterioratio
April 2, 2024 9:00 AM UTC
Into Q2, data and policy (actual and perceived) will dominate DM markets. The ECB will likely take the spotlight with a 25bps cut on June 7, as the Fed face a better growth/more fiscal policy expansion and a tighter labor market than the EZ but also with a better productivity backdrop and outlook to
March 28, 2024 2:20 PM UTC
The Brazilian Central Bank's Quarterly Inflation Report reflects uncertainty over disinflation and emphasizes caution in monetary policy. Despite slower expected disinflation and inflationary surprises in certain sectors, the BCB projects optimism with inflation nearing target. Labor market data sho
March 26, 2024 1:11 PM UTC
The Brazilian Central Bank has released the minutes of their last minutes. The minutes highlighted the uncertainty, labour market pressures and unanchored expectations. They decided to reduce the horizon of the 50bps ace to the May meeting which indicates a prospective reduction to diminish the pace
March 22, 2024 7:04 PM UTC
· Brazil and Mexico growth will decelerate from the growth rates seen in 2023. The stronger basis of comparisons in 2023 and the tight monetary policy will diminish growth during 2024. Brazil robust agricultural growth will not repeat in 2024, while Mexico growth is restrained by a tigh
March 21, 2024 12:50 PM UTC
The Central Bank (BCB) slashed the policy rate by 50bps to 10.75%, with further cuts anticipated. Medium-term easing hinges on inflation dynamics and economic factors. The BCB's forward guidance suggests a potential shift in communication and cut magnitude by June, changing the cut pace to 25bps fro
March 18, 2024 4:48 PM UTC
The Brazilian Central Bank is anticipated to cut the policy rate by 50bps, reaching 10.75%, amidst easing inflation and cautious market sentiment. The recent surge in food prices raises concerns, while the BCB is expected to abandon its usual forward guidance in favor of more data-driven decisions.
March 12, 2024 6:55 PM UTC
The Brazilian National Statistics Institute (IBGE) released February's CPI figures, slightly exceeding market expectations at 0.82% (m/m), maintaining the Y/Y index at 4.5%. Notably, the rise was seen in the Educational group, alongside gasoline prices (+2.48%) and a drop in airfare tickets (-10.4%)
March 8, 2024 8:56 PM UTC
IBGE will release February's CPI data on Mar. 12, forecasting a 0.7% increase, driven mainly by education and food sectors. While some rises may persist, they're not indicative of a general price surge. Despite a 0.7% rise, Y/Y CPI is expected to drop to 4.4%, aligning with BCB targets. Forecasts su
March 1, 2024 1:37 PM UTC
Brazil's GDP remained stable in Q4 2023, growing marginally lower than expected. Agriculture saw a significant contraction, while Industry and Services showed modest growth. Government consumption offset household contraction, and investment reversed a five-quarter decline. Despite annual growth, de
February 28, 2024 2:51 PM UTC
The Brazilian GDP is anticipated to have contracted by 0.1% in Q4 2023, yet the annual growth for 2023 is expected at 3.1%, marking the third consecutive year above the 3.0% threshold. Agricultural sector's significant 15% growth, primarily driven by soybean harvest, offsets the deceleration. Tight
February 22, 2024 10:00 AM UTC
Bottom Line: Most major EMFX currencies have performed better than the Euro or the Japanese Yen against the USD in 2024 (Figure 1). This is due to carry trades in Latam, but elsewhere reflects global equity love on Indian equities or domestic fundamentals. This resilience for Brazilian Real/Indi
February 21, 2024 7:32 PM UTC
The Brazilian economy experienced marginal growth of 0.2% in 2023, signaling a return to pre-pandemic low-growth trends. Despite a promising agricultural sector, projections show a contraction in 2024. Factors such as consumption push and cautious monetary policy influence future growth prospects. H
February 14, 2024 10:20 PM UTC
Brazil's labor market showed remarkable resilience in 2023, with a notable decrease in unemployment to 7.4% from 8.6%. Increased occupation drove consumption and growth, though real wage growth outpaced job creation. Despite challenges, strong syndicates and minimum wage policies will sustain upward