Wednesday April 12 2017
Brazil Cuts Interest Rate By 100 Bps To 11.25%
Mario | mario@tradingeconomics.com

The Central Bank of Brazil cut its key Selic rate by 100 basis points to 11.25 percent on April 12th 2017, in line with market expectations. It is the fifth straight rate decline, bringing borrowing costs to the lowest since November of 2014 amid slowing inflation and a sticky contraction. It follows tandem 75bps cuts in February and January.

In its policy statement, the central bank highlighted that inflation developments remain favorable. The Copom's inflation forecasts for 2017 and 2018 in the scenario with interest rate and exchange rate paths are around 4.1% and 4.5%, respectively. This scenario assumes a path for the policy interest rate that ends 2017 at 8.5% and remains at that level until the end of 2018 (vs 9.5 percent and 9.0 percent in the previous meeting).

The central bank started its easing cycle in October last year after the inflation rate eased from double digits. Inflation slowed faster than expected in the past seven months due to subdued economic activity and a stronger real. The inflation fell to 4.57 percent in March, easing from a 4.76 percent rise in February. Although the inflation rate remains slightly above central bank's official target of 4.5 percent, it stands at its lowest level since August of 2010.

Still, the economic recovery could take even longer than initially expected: Brazil’s industrial production contracted 0.8 percent year-on-year in February, compared to expectations of a 0.4 percent expansion. On the positive side, the manufacturing PMI rose to a 25-month high of 49.6 in March from 46.9 in February. Moreover, the industrial production report showed manufacturing output increased for the first time in over two years. The median estimate in a central bank poll of economists currently points to growth of 0.41 percent in 2017 and 2.50 percent in 2018. Analysts expect the Selic rate to end 2017 at 8.50 percent (-50bps compared to 4 weeks ago).




Friday April 07 2017
Brazil Inflation Rate Lowest Since August 2010
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Brazil went up 4.57 percent year-on-year in March of 2017, easing from a 4.76 percent rise in February and compared to market expectations of a 4.54 percent increase. The inflation rate slowed for the seventh month to the lowest since August of 2010, remaining slightly above central bank's official target of 4.5 percent.

Prices rose at a slower pace for: food and beverages (4.04 percent from 4.97 percent in February); transport (1.77 percent from 2.81 percent); clothing (2.2 percent from 3.03 percent); health (10.34 percent from 10.44 percent); personal expenses (6.64 percent from 6.72 percent) and furnishings and household equipment (1 percent from 2 percent). In contrast, prices went up faster for housing and utilities (4.47 percent from 2.59 percent); communication (2.74 percent from 1.68 percent) and education (8.3 percent from 7.95 percent).

On a monthly basis, consumer prices increased 0.25 percent, following a 0.33 percent rise in February and compared to market expectations of 0.23 percent. It is the lowest monthly rate for a March month since 2012. Biggest upward pressure came from electricity cost that went up 4.43 percent.




Tuesday April 04 2017
Brazil Trade Surplus Reaches Record High In March
Joana Taborda | joana.taborda@tradingeconomics.com

Brazil recorded a USD 7,145 million trade surplus in March of 2017, 61.1 percent higher than a USD 4,435 million surplus a year earlier and beating market expectations of USD 6,800 million. It is the largest trade surplus on record as exports jumped 25.6 percent year-on-year and imports rose at a slower 11.9 percent.

Exports reached USD 20,085 million, boosted by sales of basic products (29.7 percent), mainly iron ore (186.7 percent), crude oil (145.9 percent), pork (33.4 percent) and chicken meat (7 percent). Shipments also increased for manufactured (12.3 percent) and semimanufactured products (7.4 percent), namely hydrocarbons (170.9 percent), fuel oils (161.7 percent), synthetic rubber (111.9 percent), semimanufactured iron and steel (109.3 percent), flexible tubes of iron and steel (94.6 percent) and cargo vehicles (67.1 percent).

Imports went up to USD 12,940 million, mainly due to purchases of fuels and lubricants (14.4 percent), intermediate goods (10.6 percent) and consumer goods (1 percent), while purchases of capital goods fell 10.5 percent. 

Considering the first quarter of 2017, exports increased 20.4 percent on a calendar adjusted basis to USD 50.5 billion and imports rose at a slower 8.4 percent to USD 36 billion, resulting in a USD 14.4 billion trade surplus. Sales to China jumped 57.7 percent and accounted for nearly 25 percent of total exports. 




Friday March 31 2017
Brazil Unemployment Rate Rises To Fresh Record High
IBGE | Joana Ferreira | joana.ferreira@tradingeconomics.com

The jobless rate in Brazil rose to a new record high of 13.2 percent in the quarter ended February 2017 from 11.9 percent in the three months to November 2016 and in line with market expectations. The number of unemployed jumped by 11.7 percent to 13.55 million people while employment fell by 1 percent to 89.35 million, bringing the employment rate to a record low of 53.4 percent.

Compared with the September-November 2016 period, the number of unemployed persons jumped 11.7 percent, or by 1,415 thousand, to 13.55 million, reaching the highest level on record. Employment fell by 1 percent to 89.35 million, with job losses in public administration, defense, social security, education, human health and social services (-4.4 percent, or -702 thousand) and industry (-2 percent, or -225 thousand). By contrast, there were increases in housing and food (3.5 percent, or 169 thousand) and information, communication and financial activities, real estate, professional and administrative (2.2 percent, or 215 thousand).

People attached to the labour force, that is, either employed or unemployed but actively seeking for job rose by 0.5 percent or by 550 thousand to 102.89 million. Those detached from the labour force were steady at 64.6 million. The labour force participation rate went up to 61.4 percent from 61.3 percent.

Compared with the same period a year earlier, the number of unemployed people surged 30.6 percent while employment dropped 2 percent.

The average real income (BRL 2,068) in the quarter ended February 2017 remained stable compared to the previous quarter (BRL 2,049) and also in relation to the same quarter of 2016 (BRL 2,037).




Friday March 10 2017
Brazil Inflation Rate Slows To 6-1/2-Year Low
IBGE | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in Brazil rose by 4.76 percent in the year to February 2017, down from an increase of 5.35 percent in the previous month and below market expectations of 5.35 percent gain. It was the lowest inflation rate since September 2010. Inflation remained slightly above the central bank's official target of 4.5 percent.

Prices rose at a slower pace for: Food and beverages (4.97 percent from 6.57 percent in January); transport (2.81 percent from 3.19 percent); clothing (3.03 percent from 3.42 percent); health (10.44 percent from 10.76 percent); and personal expenses (6.72 percent from 7.21 percent). Additional upward pressure came from: Housing and utilities (2.59 percent); recreation and culture (4.68 percent); furnishings and household equipment (2.00 percent); communication (1.68 percent); and education (7.95 percent).

On a monthly basis, consumer prices increased by 0.33 percent, following a 0.38 percent rise in January and less than markets expected. Cost rose at a slower pace for transport (0.24 percent from 0.77 percent in January); while it fell for food (-0.45 percent from 0.35 percent). 


Tuesday March 07 2017
Brazil GDP Shrinks More Than Expected In Q4
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

The Brazilian economy contracted 0.9 percent on quarter in the last three months of 2016, following a downwardly revised 0.7 percent drop in the previous period and worse than market expectations of a 0.6 percent fall. Household consumption declined at a steeper pace and imports recovered while investment and exports shrank less and government spending edged up.

Household spending fell 0.6 percent, more than a 0.3 percent drop in the previous quarter. In contrast, government spending edged up 0.1 percent, following a 0.4 percent fall in the previous quarter and marking the first increase in nine months. Gross fixed capital formation fell at a slower 1.6 percent (-2.5 percent in Q3) and exports also declined less (-1.8 percent compared to -3.2 percent). On the other hand, imports rose 3.2 percent, recovering from a 3.1 percent decline in the previous period. 

On the production side, the services sector shrank at a faster 0.8 percent (-0.5 percent in Q3) as internal trade fell more (-1.2 percent compared to -0.4 percent) and information services (-2.1 percent compared to 0.3 percent in Q3) and real estate (-0.2 percent compared to a flat reading in Q3) came back to contraction. The industrial sector declined at a slower 0.7 percent, following a 1.4 percent drop in the previous period, dragged down by construction (-2.3 percent compared to -1.7 percent in Q3), manufacturing (-1 percent compared to -1.3 percent in Q3) and electricity output (-0.1 percent compared to -1.2 percent in Q3). In contrast, mining rose 0.7 percent (3.7 percent in Q3) and agriculture went up 1 percent, following a 2.1 percent drop in Q3 and marking the first increase in 2016. 

Year-on-year, the economy slumped 2.5 percent, the eleventh straight quarter of contraction. Considering full 2016, the GDP declined 3.6 percent, following a 3.8 percent deop in 2015, marking the worst recession on record. Agriculture (-6.6 percent compared to +3.6 percent in 2015), industrial production (-3.8 percent compared to -6.3 percent in 2015) and services (-2.7 percent, the same as in 2015) fell. In 2017, markets expect the economy to expand 0.5 percent. 




Tuesday March 07 2017
Brazil Economy Contracts 2.5% YoY In Q4
IBGE | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Brazilian economy shrank 2.5 percent year-on-year in the fourth quarter of 2016, following a a 2.9 percent fall in the previous period and worse than market expectations of a 2.3 percent drop. It was the eleventh straight quarter of contraction, mainly due to sharp declines in both household consumption and fixed investment.

From the expenditure side, fixed investment dropped 5.4 percent (-8.4 percent in Q3), household consumption fell 2.9 percent (-3.4 percent in Q3) and government spending declined 0.1 percent (-0.8 percent in Q3). Also, net external demand contributed negatively, as exports decreased sharply by 7.6 percent (0.2 percent in Q3) and imports went down at a slower 1.1 percent percent (-6.8 percent in Q3).

From the production side, the service industries decreased by 2.4 percent following a 2.2 percent fall in Q3, as output declined for: trade (-3.5 percent from -4.4 percent); transport and storage (-7.5 percent from -7.4 percent); information services (-3 percent from -1.5 percent); financial services (-3.4 percent from -3.3 percent); and public health, education and social security (-0.7 percent from 0.1 percent). Industrial output decreased by 2.4 percent (-2.9 percent in Q3), as output contracted for: manufacturing (-2.4 percent from -3.5 percent); and construction (-7.5 percent from -4.9 percent); while growth was recorded in electricity, gas, steam and air conditioning supply (2.4 percent from 4.3 percent) and mining (4 percent from -1.3 percent). Agriculture fell 5 percent after shrinking by 6 percent in Q3.

On a quarterly basis, the economy shrank 0.9 percent, worse than a 0.7 percent contraction in the previous period. 

In 2016 as a whole, the GDP fell 3.6 percent, following a 3.8 percent decline in 2015.




Friday March 03 2017
Brazil Trade Surplus At Record High For February Month
Joana Taborda | joana.taborda@tradingeconomics.com

Brazil recorded a USD 4560 million trade surplus in February of 2017, 50 percent higher than a USD 3042 million surplus a year earlier and beating market expectations of USD 3270 million. It is the largest trade surplus on record for a February month.

Exports rose 15.9 percent year-on-year to USD 15,472 million, following a 32.6 percent jump in the previous month. Accounting for calendar effects, sales rose at a faster 22.4 percent, mainly boosted by oil (326.6 percent); iron ore (126.2 percent); soybeans (107.2 percent); pork (40 percent) and chicken meat (35.8 percent). In addition, shipments also rose for fuel oil (480.7 percent); cargo vehicles (38.8 percent); passenger cars (31.6 percent); cast iron (139 percent); crude soybean oil (109.9 percent) and semimanufactured iron and steel (92.6 percent).

Imports went up 5.9 percent year-on-year to USD 10912 million, easing from an 18 percent jump in January. Accounting for calendar effects, purchases rose 11.8 percent, mainly due to intermediate goods (16.3 percent) and fuels and lubricants (34.9 percent), as prices went up for diesel, gasoline, coal, coal, butane and liquefied propane. On the other hand, imports fell for capital goods (-9.8 percent) and consumer goods (-4.4 percent).

Considering the first two months of 2017, Brazil recorded a USD 7,300 million trade surplus, the highest for the period since the series began. Exports jumped 20.5 percent and imports increased at a slower 9.2 percent. Sales rose the most for China (78.9 percent), the United States (15.3 percent) and Argentina (18.4 percent). 


Friday February 24 2017
Brazil Unemployment Rate At Fresh High Of 12.6%
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

The jobless rate in Brazil increased for the third straight month to 12.6 percent in the three months to January of 2017 from 12 percent in the previous period, above market expectations of 12.4 percent. It hit again a new record high since the series began in 2012.

Compared with the August-October period, the number of unemployed persons rose by 7.3 percent or by 879 thousand to 12.92 million, reaching the highest on record. Employment was nearly unchanged at 89.85 million, with job losses in industry (-2.2 percent or 254 thousand), public administration, defense, social security, education and health (-4.1 percent or 651 thousand) and domestic services (-1.4 percent or 89 thousand) offseting gains in internal trade (2.4 percent or 410 thousand); information , communication , finance and real estate services (2.5 percent or 237 thousand); accomodation and food (3.4 percent or 161 thousand) and transportation (2.8 percent or 126 thousand). 

People attached to the labour force, that is, either employed or unemployed but actively seeking for job rose by 0.8 percent or by 849 thousand to 102.77 million. Tthose detached from the labour force fell by 0.2 percent or by 119 thousand to 64.608 million. The labour force participation rate went up to 61.4 percent from 61.2 percent. 


Friday February 24 2017
Brazil Lowers Benchmark Interest Rate To 12.25%
Mario | mario@tradingeconomics.com

The Central Bank of Brazil cut its key Selic rate by 75 basis points to 12.25 percent on February 22nd 2017, in line with market expectations. It is the fourth straight rate decline, bringing borrowing costs to the lowest in nearly 2 years amid slowing inflation and a sticky contraction. It follows a 75bps cut in January.

Policymakers said that the global outlook remains quite uncertain and that inflation developments remain favorable. It also highlighted the importance of approval and implementation of reforms (notably, the fiscal) for the sustainability of disinflation and for the reduction of the structural interest rate. The Copom's inflation forecasts retreated to around 4.2 percent for 2017, and remained around 4.5 percent for 2018. This scenario assumes a path for the policy interest rate that ends 2017 and 2018 at 9.5 percent and 9 percent, respectively.

The central bank started its easing cycle in October last year after the inflation rate eased from double digits. Inflation slowed faster than expected in the past four months due to subdued economic activity and a stronger real. Yet, the inflation fell to 5.35 percent in January, the lowest since September of 2012 and the real has been appreciating since December, strengthening 11.3 percent against the USD since then. 

Still, the economic recovery could take even longer than initially expected: the IBC-Br index of economic activity fell 0.26 percent in December after rising by 0.1 percent in November, the most in six months. The manufacturing PMI fell to 44 in January, reaching the lowest in seven months. On the positive side, business and consumer confidence have improved so far this year. The median estimate in a central bank poll of economists points to a 0.48 percent growth in 2017.