Thursday March 21 2019
Brazil Leaves Monetary Policy Unchanged
Banco Central do Brasil | Mario | mario@tradingeconomics.com

The Central Bank of Brazil voted unanimously to hold its key Selic rate at a record low of 6.50 percent on March 20th 2019, as widely expected. Policymakers noted that recent data on economic activity came in below expectations, still the domestic economy continues on a gradual recovery path and added that the global outlook remains challenging.

The Committee judged that the decision reflects its baseline scenario for prospective inflation and the associated balance of risks, and is consistent with convergence of inflation to target over the relevant horizon for the conduct of monetary policy, which includes 2019 and, with gradually increasing weight, 2020. The Copom reiterated that economic conditions prescribe stimulative monetary policy, i.e., interest rates below the structural level.

The central bank started its easing cycle in October of 2016 after the inflation rate eased from double digits. The inflation rate finished 2018 within the central bank target of 4.5 percent plus or minus 1.5 percentage points and above 2.95 percent in 2017. It currently remains on target. The annual inflation rate in Brazil rose to 3.89 percent in February of 2019 from 3.78 percent in the previous month. It was the highest inflation rate in three months. 

The economic recovery is still taking longer than initially expected, with recent negative data. GDP grew 1.1 percent year-on-year in the fourth quarter of 2018, easing from 1.3 percent in the previous three-month period and missing market expectations of 1.3 percent. Household consumption and exports drove the expansion, while fixed investment rose at softer pace and government spending contracted. Meantime, industrial production in Brazil decreased 2.6 percent year-on-year in January 2019, following a 3.6 percent decline in the prior month and compared with market forecasts of a 1.2 percent fall.

The Copom's inflation projections in the scenario with interest rate and exchange rate paths extracted from the Focus survey stand around 3.9% for 2019 and 3.8% for 2020..




Tuesday March 12 2019
Brazil Annual Inflation Rate at 3-Month High in February
IBGE | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Brazil rose to 3.89 percent in February of 2019 from 3.78 percent in the previous month. Prices increased further mostly due to higher cost of food and non-alcoholic beverages.

Year-on-year, inflation rose for food and non-alcoholic beverages (5.37 percent from 4.21 percent in January); housing (6.04 percent from 5.87 percent), namely electricity (15.47 percent from 13.96 percent); personal expenses (3.40 percent from 3.38 percent); household goods (4.11 percent from 3.93 percent); health (3.90 percent from 3.79 percent); and clothing and footwear (0.48 percent from 0.43 percent). Meanwhile, prices slowed for transport (1.97 percent from 3.07 percent), mainly due to fuels (-0.59 percent from 1.33 percent); and education (4.85 percent from 5.22 percent). Also, cost of communication fell at a faster pace (-0.29 percent from -0.15 percent). 

On a monthly basis, consumer prices went up 0.43 percent, after increasing 0.32 percent in the prior month and above market expectations of a 0.2 percent gain. Main upwardly pressure came from education (3.53 percent from 0.12 percent in January), reflecting the readjustments practiced at the beginning of the school year, mainly monthly fees of the regular courses; housing (0.38 percent from 0.24 percent), namely electricity (1.14 percent); and health (0.49 percent from 0.26 percent). On the other hand, cost of food and non-alcoholic beverages eased (0.78 percent from 0.9 percent), namely beans (51.58 percent), potatoes (25.21 percent), vegetables (12.13 percent) and milk (2.41 percent) and prices of transport dropped (-0.34 percent from 0.02 percent), driven by air tickets (-16.65 percent) and gasoline (-1.26 percent).




Friday March 01 2019
Brazil Trade Surplus Hits Record High for February
Joana Taborda | joana.taborda@tradingeconomics.com

The trade surplus in Brazil widened to USD 3.67 billion in February of 2019 from USD 2.99 billion a year earlier. Figures beat market expectations of USD 3 billion as imports fell faster than exports. Imports in February tend to be volatile due to Carnival. Carnival in 2019 will follow in March while in 2018 if fell in February. Yet, it is the highest trade surplus for a February month since the series began.

Exports fell 6.4 percent from a year earlier to USD 16.29 billion. Sales went down for semimanufactured products (-12.5 percent), namely soy oil, cast iron and leathers; and manufactured (-24.8 percent), namely platforms for oil extraction, cargo vehicles and autos. In contrast, sales rose for basic products (22.4 percent), namely soybeans, cotton, corn, iron ore and coffee. Shipments slumped 37.6 percent to the EU, but increased 30.1 percent to China and 16.4 percent to the US. 

Imports declined 12.4 percent to USD 12.62 billion, mainly due to purchases of consumption goods (-1.5 percent), capital goods (-57.7 percent) and fuels and lubricants (-27 percent). In contrast, sales of intermediate goods rose 7.8 percent. Imports fell from the US (-2.7 percent) and the EU (-6.2 percent) but rose from China (6.4 percent).




Thursday February 28 2019
Brazil Q4 GDP Growth Slows to 0.1% QoQ
IBGE | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Brazilian economy advanced 0.1 percent on quarter in the fourth quarter of 2018, slowing from a downwardly revised 0.5 percent expansion in the previous period and below market expectations of 0.2 percent. The slowdown was mainly due to a decline in government spending and gross fixed capital formation.

On the expenditure side, government consumption shrank 0.3 percent (+0.3 percent in Q3) and gross fixed capital formation dropped the most sonce Q3 of 2016 (-2.5 percent compared to +5.5 percent). On the other hand, consumer spending increased 0.4 percent, easing from a 0.5 percent in the third quarter of 2018. Meantime, exports rose 3.6 percent (6.3 percent in Q3) while imports fell 6.6 percent (9.4 percent in Q3).

On the production side, the industrial sector contracted 0.3 percent, after expanding 0.3 percent in the previous quarter. Manufacturing was down 1 percent  (+0.6 percent in Q3) and slower growth was reported for construction (0.1 percent compared to 0.4 percent) and mining (1.9 percent compared to 0.8 percent). In contrast, utilities output rebounded 3.9 percent (-2 percent in Q3). 

The services sector advanced 0.2 percent, after a 0.3 percent rise in the prior period brought down by decline in internal trade (-0.1 percent compared to 1.0 percent); transportation (-0.3 percent compared to 1.8 percent) and financial services (-0.5 percent compared to a flat reading). Additionally, real estate activities went up less (0.7 percent compared to 1 percent). 

Finally, agriculture grew 0.2 percent, following a 0.8 percent gain in the prior period.

Year-on-year, the gross domestic product expanded 1.1 percent easing from a 1.3 percent growth in the previous period and missing market consensus of 1.3 percent. 

Considering full 2018, the economy grew 1.1 percent, the same as in 2017.





Thursday February 28 2019
Brazil Q4 GDP Annual Growth Weaker than Expected
IBGE | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Brazilian economy grew 1.1 percent year-on-year in the fourth quarter of 2018, easing from 1.3 percent in the previous three-month period and missing market expectations of 1.3 percent.

From the expenditure side, household expenditure grew 1.5 percent (vs 1.4 percent in Q3) and fixed investment rose 3 percent (vs 7.8 percent in Q3). Also, net external demand contributed positively to GDP growth, as exports jumped 12 percent (vs 2.6 percent in Q3) and imports increased at a slower 6 percent percent (vs 13.5 percent in Q3). On the other hand, government spending fell 0.7 percent, after a 0.3 percent advance in the third quarter.

From the production side, the service industries grew 1.1 percent following a 1.2 percent expansion in Q3, as output rose for: trade (0.9 percent vs 1.6 percent); transport and storage (1.7 percent vs 2.9 percent); information and communication (2.5 percent vs 1.1 percent); real estate activities (3.4 percent vs 3.2 percent); public health, education and social security (0.1 percent, the same as in Q3); and other service activities (1.5 percent vs 0.6 percent). By contrast, financial, insurance and related services activities shrank 0.5 percent, compared to 1 percent growth in Q3. In addition, agriculture output advanced 2.4 percent, little-change from the third-quarter 2.5 percent expansion; while industrial output contracted 0.5 percent, reversing a 0.8 percent rise in Q3. Within industry, declines were seen in manufacturing (-1.5 percent vs 1.6 percent) and construction (-2.2 percent vs -1 percent), while growth accelerated for both mining (3.9 percent vs 0.7 percent) and utilities (4.6 percent vs 0.5 percent).

Considering 2018 as a whole, the GDP rose 1.1 percent, the same pace as in 2017. Fixed investment rose for the first time in five years (4.1 percent vs -2.5 percent in 2017) and household consumption growth picked up to 1.9 percent from 1.4 percent. Meanwhile, government spending was unchanged (vs -0.9 percent in 2017) and net external demand contributed negatively to the GDP as imports jumped 8.5 percent (vs 5 percent in 2017) and exports increased at a slower 4.1 percent (vs 5.2 percent in 2017).




Wednesday February 27 2019
Brazil Jobless Rate Above Estimates at 12%
IBGE | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Brazil increased to 12.0 percent in the three months to January 2019 from 11.7 percent in the August-October period but fell from a 12.2 percent a year earlier. It compares with market expectations of 11.9 percent. It was the highest jobless rate since the three months to August 2018 period.

Compared with the three months ended in October of 2018, the number of unemployed rose by 318 thousand to 12.669 million. 

Employment declined by 354 thousand to 92.547 million, with most of job losses occurring in agriculture, livestock, forestry, fishery and aquaculture (-192 thousand); industry (-345 thousand fewer); public administration, defense, social security and education (-175 thousand) and other services (-139 thousand). Meanwhile, job gains were recorded in transportation, warehousing and mail (+129 thousand); hotels and restaurants (+126 thousand); and information and communication activities, finance, real estate, professional and administrative activities (+167 thousand). 

The number of people in the labour force fell by 36 thousand to 105.217 million and those detached from the labour force went up by 403 thousand to 65.511 million.

Compared with the same period of 2018, the number of unemployed dropped by 20 thousand from 12.689 million, while employment increased by 846 thousand from 91.702 million.

The average real income was estimated at BRL 2,270 in the three months to January, compared to BRL 2,240 in the three months to October and to BRL 2,251 a year ago.




Friday February 08 2019
Brazil Inflation Rate Barely Unchanged at 3.78%
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

Annual inflation rate in Brazil was nearly steady at 3.78 percent in January of 2019 from 3.75 percent in December, compared to market expectations of 3.7 percent. Food inflation was the highest since February of 2017 while fuel prices slowed sharply, manly due to gasoline.

Year-on-year, inflation went up for food and non-alcoholic beverages (4.21 percent vs 4.04 percent in December); personal expenses (3.38 percent vs 2.98 percent); housing (5.87 percent vs 4.72 percent), namely electricity (13.96 percent vs 8.7 percent); personal expenses (3.38 percent vs 2.98 percent); and household goods (3.93 percent vs 3.74 percent). On the other hand, prices rose less for transport (3.07 percent vs 4.19 percent), mainly due to fuels (1.33 percent vs 6.17 percent); health (3.79 percent vs 3.95 percent); clothing and footwear (0.43 percent vs 0.61 percent); and education (5.22 percent vs 5.32 percent); and declined for communication (-0.15 percent vs -0.09 percent). 

On a monthly basis, consumer prices increased 0.32 percent, higher than 0.15 percent in December and above market expectations of 0.13 percent. Cost of food and non-alcoholic beverages rose the most (0.9 percent vs 0.44 percent in December), namely carioca beans (19.76 percent), onions (10.21 percent), fruit (5.45 percent) and meat (0.78 percent); followed by personal expenses (0.61 percent vs 0.29 percent), namely trips (6.77 percent), hotels (1.06 percent) and hairdressing (0.69 percent). Also, prices of housing rebounded (0.24 percent vs -0.15 percent), mainly due to cost of residential rents (0.42 percent) and condominium (0.77 percent) while prices of electricity fell less (-0.13 percent). Cost of transport was nearly flat (0.02 percent vs -0.54 percent) as fuels decreased at a slower pace (-2.09 percent).


Thursday February 07 2019
Brazil Holds Interest Rate at 6.5%
Banco Central do Brasil | Mario | mario@tradingeconomics.com

The Central Bank of Brazil voted unanimously to hold its key Selic rate at a record low of 6.50 percent on February 6th 2019, as widely expected. Policymakers said that the decision reflects its baseline scenario for prospective inflation and its risks and it is consistent with the convergence of inflation to the target range.

Policymakers mentioned that while global volatility has ameliorated, risks persist in emerging economies, underscoring increase in risk aversion in global financial markets, with normalization of interest rates in some advanced economies, and with uncertainty regarding international trade policy. The central added the current economic scenario warrants loose monetary policy, with rates below neutral.

The central bank started its easing cycle in October of 2016 after the inflation rate eased from double digits. The annual inflation rate in Brazil dropped to 3.75 percent in December of 2018 from 4.05 percent in November, slightly above market expectations of 3.70 percent. It is the lowest inflation rate since May, as prices slowed mostly for food and fuels. The inflation rate finished 2018 within the central bank target of 4.5 percent plus or minus 1.5 percentage points and above 2.95 percent in 2017.

The economic recovery is still taking longer than initially expected, with recent mixed data. Brazil’s GDP expanded 0.8 percent on quarter in the third quarter of 2018, above a 0.2 percent rise in the previous period and in line with market expectations. It was the highest growth rate since the first quarter of 2017, mainly due to a rebound in investment and government spending. However, industrial output fell 3.6 percent year-on-year in December, following a 1.0 percent decline in the prior month.

The median estimate in the last central bank poll of economists (01 February 2019) currently points to growth of 2.50 percent for 2019 (vs 2.53 percent four weeks ago) and of 2.50 percent for 2020 (unchanged vs four weeks ago). Analysts expect the Selic rate to end 2019 at 6.50 percent (vs 7.00 percent) and rise to 8.0 percent in 2020 (unchanged).


Friday February 01 2019
Brazil Posts Smallest Trade Surplus in 3 Years
MDIC | Stefanie Moya | stefanie.moya@tradingeconomics.com

Brazil's trade surplus narrowed to USD 2.19 billion in January 2019 from USD 2.82 billion in the same month of the previous year and below market expectations of USD 3.4 billion. It was the smallest trade surplus since January of 2016, as imports jumped 15.4 percent year-on-year to USD 16.39 billion and exports rose at a softer 9.1 percent to USD 18.58 billion.

Imports went up 15.4 percent from a year earlier to USD 16.39 billion in January, mainly driven by higher purchases of capital (156.2 percent) and intermediate goods (3.6 percent). On the other hand, imports dropped for fuels and lubricants (-12.5 percent) and consumption goods (-3.5 percent).

Among major trading partners, shipments rose from China (81 percent), Argentina (4.9 percent) and Japan (8.2 percent) while declined from the US (-5.2 percent), ASEAN (-8.8 percent) and the EU (-5.1 percent).


Exports increased 9.1 percent to USD 18.58 billion, mostly due to sales of primary goods (10.1 percent), namely corn (+56.6 percent), raw cotton (+44.5 percent), copper ore (+37.5 percent), soybeans (+37.5 percent), soybean meal (+21.8 percent), and iron ore (+11.4 percent). Also, exports of semi-manufactured products advanced 11.1 percent led by cast iron (+123.7 percent), copper cathodes (+48.8 percent) and cellulose (+42.5 percent). Additionally, sales of manufactured products went up 15.2 percent, boosted by oil extraction, airplane parts (+172.6 percent), planes (+124.8 percent), fuel oil (+101.8 percent) and footwear (+23.0 percent). 

Among major trading partners, sales rose to China (20.8 percent), ASEAN countries (59.2 percent), the US (2.1 percent), but went down to the EU (-5.6 percent) and Argentina (-43.7 percent).



Thursday January 31 2019
Brazil Jobless Rate Falls to 11.6%
IBGE | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in Brazil fell to 11.6 percent in the three months to December of 2018, from 11.9 percent in July-September period and 11.8 percent a year earlier. Compared with the three months ended in November, the jobless rate was unchanged, remaining the lowest since the three months to July 2016.

Compared with the three months ended in September of 2018, the number of unemployed declined by 297 thousand to 12.195 million. 

Employment increased by 381 thousand to 93.002 million, with most of job gains occurring in internal trade, repair of motor vehicles and motorcycles (+266 thousand); information and communication activities, finance, real estate, professional and administrative activities (+190 thousand); transport and mail (+157 thousand); public administration, defense, social security and education (+54 thousand); and construction (+34). 

The number of people in the labour force rose by 83 thousand to 105.197 million and those detached from the labour force went up by 171 thousand to 65.369 million.

Compared with the same period of 2017, the number of unemployed fell by 116 thousand from 12.311 million, while employment advanced by 894 thousand from 92.108 million.

The average real income was estimated at BRL 2,254 in the three months to December, compared to BRL 2,237 in the three months to September and to BRL 2,241 a year earlier.