Wednesday February 08 2017
Brazil Inflation Rate At Near 4-1/2-Year Low Of 5.35%
IBGE | Joana Taborda |

The inflation rate in Brazil eased for the fifth month to 5.35 percent in January of 2017, the lowest since September of 2012 and below market expectations of 5.41 percent. Inflation slowed faster than expected in the past four months due to weaker demand and a stronger real and after reaching double digits last year. The central bank expects inflation at around 4 percent in 2017.

Year-on-year, prices rose less for: food and beverages (6.57 percent from 8.62 percent in December); housing and utilities (2.2 percent from 2.85 percent); and transport (3.19 percent from 4.22 percent). Inflation also eased for health (10.76 percent from 11.04 percent); clothing (3.42 percent from 3.55 percent); personal expenses (7.21 percent from 8 percent).

On a monthly basis, consumer prices increased 0.38 percent, slightly higher than 0.3 percent in December. The biggest upward impact came from cost of city buses (2.84 percent), food (0.35 percent) and housing (0.17 percent). Cost of water and sewerage increased 0.61 percent, offsetting a 0.6 percent decline in prices of electricity.

Wednesday February 01 2017
Brazil Trade Surplus Widens 195% YoY In January
Joana Taborda |

Brazil recorded a USD 2724 million trade surplus in January of 2017, much higher than a USD 922 million surplus a year earlier and beating market expectations of USD 2100 million. It is the largest trade surplus for a January month since 2006 when it came at USD 2835 million.

Exports jumped 32.6 percent year-on-year to USD 14911 million, following a 5 percent drop in the previous month. It is the biggest rise since August of 2011. Sales rose for primary products (30 percent), namely soybeans (124.7 percent), iron ore (124.5 percent), oil (97.7 percent), pork (60.2 percent), chicken (23.4 percent), coffee (7.8 percent) and beef (5.1 percent). Shipments also rose for sugar (112.7 percent), fuels (271.2 percent), orange juice (251.2 percent), cargo vehicles (114 percent) and auto vehicles (34.5 percent). Sales to China recorded the biggest increase (74.3 percent), mainly due to oil, iron ore and soybeans. 

Imports went up 18 percent to USD 12187 million, following a 9.3 percent rise in the previous month. It is the strongest increase since October of 2013. Purchases of intermediate goods rose the most (22.8 percent), followed by fuels and lubricants (15.8 percent) and consumer goods (2.8 percent) while capital goods went down 40.1 percent. China was the main importt partner, followed by the United States, Germany, Argentina and South Korea.

In 2016, the country recorded a USD 47.69 billion surplus, the trade surplus on record and higher than USD 19.69 billion in 2015. Exports fell 3.1 percent and imports shrank at a faster 19.8 percent. 

Tuesday January 31 2017
Brazil Unemployment Rate Rises To New High Of 12%
Joana Taborda |

The jobless rate in Brazil increased to 12 percent in the three months to December of 2016 from 11.9 percent in the previous period, in line with market expectations. It hit a new record high since the series began in 2012.

Compared with the July-September period, the number of unemployed persons rose by 2.7 percent or by 300 thousand to 12.3 million. Employment increased at a slower 0.5 percent to 90.3 million, with job gains occuring in internal trade (3.3 percent or 559 thousand), transportation (2.5 percent or 110 thousand) and accomodation and food (3.1 percent or 145 thousand). In contrast, job losses were recorded in public administration, defense, social security, education and health (-1.3 percetn or 199 thousand). 

In 2016, the unemployment rate averaged 11.5 percent, higher than 8.5 percent in 2015. There were 11.8 million unemployed persons, compared to 8.6 million in 2015 and the number of employed fell to 90.4 million from 92.1 million. Real wages shrank 2.3 percent to BRL 2029. 

Wednesday January 11 2017
Brazil Cuts Key Rate to 13%
Joana Taborda |

The Central Bank of Brazil lowered its benchmark Selic rate by 75bps to 13 percent on January 11th 2017, beating market expectations of a 50bps cut. It is the third straight rate decline, bringing borrowing cost to the lowest since March of 2015 amid slowing inflation and a severe contraction.

Policymakers said inflation has been lower expected. Yet, inflation for December came in at 6.29 percent, the lowest since April of 2014 and within the 4.5 percent to 6.5 percent target for 2016. The central bank also lowered expectations for 2017 to around 4 percent (from 4.4 percent) and to around 3.4 percent in 2018 (from 3.6 percent).

Policymakers added that evidence suggests economic recovery could take even longer and be more gradual than previously expected. Yet, the GDP shrank 0.8 percent in the third quarter of 2016, seventh straight contraction and the IBC-BR index of economic activity fell 0.48 percent month-over-month in October. The Markit manufacturing PMI fell to 45.2 in December from 46.2 in November, suggesting a steeper contraction in manufacturing.

Wednesday January 11 2017
Brazil Inflation Rate Down To 2-1/2-Year Low
IBGE | Joana Taborda |

Consumer prices in Brazil increased 6.29 percent year-on-year in December of 2016, easing from a 6.99 percent rise in November and below market expectations of 6.34 percent. The inflation eased for the fourth straight month to the lowest since April of 2014 mainly due to a slowdown in food cost. A year earlier, inflation was much higher at 10.67 percent.

Year-on-year, prices rose at a slower pace for: food and non-alcoholic beverages (8.62 percent from 10.17 percent in November); housing and utilities (2.85 percent from 3.97 percent); and transport (4.22 percent from 4.48 percent). Inflation also slowed for health (11.04 percent from 11.27 percent); (3.55 percent from 4.40 percent) and communication (1.27 percent from 1.69 percent).

On a monthly basis, consumer prices increased 0.3 percent, following a 0.18 percent gain in November and the highest in four months. Prices rebounded for food and non-alcoholic beverages (0.08 percent from -0.2 percent) and increased more for clothing (0.32 percent from 0.2 percent), transport (1.11 percent from 0.28 percent) and personal expenses (1.01 percent from 0.47 percent). In contrast, prices fell 0.59 percent for housing (+0.3 percent in November). 

Monday January 02 2017
Brazil Posts Record Trade Surplus In 2016
MDIC | Joana Ferreira |

Brazilian trade surplus decreased by 29.2 percent to USD 4.42 billion in December 2016 from USD 6.24 billion the same month of the previous year, while beating market consensus of USD 3.7 billion. For 2016, the trade surplus rose to USD 47.69 billion, its largest trade surplus on record, as exports fell less than imports amid a weaker real and a sharp recession.

Exports declined 5 percent to USD 15.94 billion from USD 16.78 billion a year earlier, dragged by lower sales of primary goods (-8.7 percent) and industrial products (-3.2 percent), of which manufactured (-6.7 percent) and semimanufactured (+7.4 percent). Among major trading partners, exports decreased to the Euro Area (-6.1 percent) and ASEAN countries (-32.5 percent); while those to China (+9.5 percent), the US (+4.5 percent) and Argentina (+39.2 percent) rose.

Imports went up 9.3 percent to USD 11.53 billion from USD 10.54 billion in December 2015, as purchases rose the most for intermediate goods (+20.7 percent) and consumer goods (+19.6 percent). Meanwhile, imports of fuels and lubricants (-15 percent) and capital goods (-15.7 percent) continued to fall. Among major trading partners, imports rose from China (+36.5 percent), the US (+19.2 percent) and Argentina (+48 percent).

Considering the whole year, the trade surplus widened sharply to USD 47.69 billion, its largest trade surplus on record, compared to USD 19.69 billion in the same period in 2015. Exports fell 3.1 percent to USD 185.24 billion due to a decrease in sales of primary goods (-9.2 percent), while exports rose for industrial products (+2.7 percent). Meanwhile, imports shrank 19.8 percent to USD 137.55 billion, led by falls in fuels and lubricants (-42.9 percent), intermediate goods (-14.6 percent), capital goods (-21.2 percent) and consumer goods (-19 percent). Imports fell from China (-24 percent), the US (-10.1 percent), the Euro Area (-15.2 percent) and Argentina (-11.7 percent).

Thursday December 29 2016
Brazil Unemployment Rate Up To Record High Of 11.9%
Joana Taborda |

The jobless rate in Brazil rose to 11.9 percent in the three months to November of 2016 from 11.8 percent in the previous period. It hit a new record high since the series began in 2012, in line with market expectations. The number of jobless people also reached a record high while employment rose for the first time in six months.

Compared with the June-August period, the number of unemployed persons rose by 0.9 percent or by 108 thousand to 12.13 million while employment edged up at a slower 0.1 percent or by 73 thousand to 90.21 million. Employment fell the most in agriculture (-3.9 percent to 8.9 million), followed by construction (-2.2 percent to 7.07 million); domestic services (-0.9 percent to 6.1 million) and public administration, defense and social security (-0.6 percent to 15.77 million). In contrast, other services (+5.7 percent to 4.39 million), accomodation and food (+4.6 percent to 4.79 million) and internal trade (+1.3 percent to 17.46 million) recorded the biggest payroll gains. 

People attached to the labour force, that is, either employed or unemployed but actively seeking for job rose by 0.2 percent or by 181 thousand to 102.34 million. Tthose detached from the labour force increased by 0.3 percent or by 206 thousand to 64.48 million. The labour force participation rate went down to 61.3 percent from 61.4 percent.

A year earlier, unemployment was lower at 9 percent. 

Friday December 09 2016
Brazil Inflation Rate Falls To Nearly 2-Year Low
IBGE | Joana Ferreira |

Consumer prices in Brazil rose 6.99 percent in the 12 months through November 2016, down from an increase of 7.87 percent in the previous month and below market consensus of a 7.08 percent gain. It was the lowest inflation rate since December 2014, as prices rose at a slower pace for food, housing and transportation. Still, inflation remained above the central bank's official target of 4.5 percent.

Prices rose at a slower pace for: food and non-alcoholic beverages (+10.17 percent from +12.41 percent in October); housing and utilities (+3.97 percent from +4.45 percent); and transport (+4.48 percent from +5.31 percent). Additional upward pressure came from: Health (+11.27 percent); recreation and culture (+6.15 percent); clothing (+4.40 percent); furnishings and household equipment (+1.81 percent); and communication (+1.69 percent).

The highest inflation rates were recorded for Belém (+8.04 percent), Porto Alegre (+7.87 percent), Campo Grande (+7.76 percent) and Recife (+7.70 percent), while the lowest rates were recorded for Curitiba (+5.48 percent), Vitória (+5.50 percent) and Brasília (+5.72 percent).

On a monthly basis, consumer prices increased by 0.18 percent, following a 0.26 percent rise in October. Cost rose at a slower pace for housing (+0.30 percent from +0.42 percent in October) and transport (+0.28 percent from +0.75 percent); while it fell for food (-0.20 percent from -0.05 percent). 

Friday December 02 2016
Brazil Trade Surplus Widens 297% YoY
Joana Taborda |

The trade surplus in Brazil rose to USD 4.76 billion in November of 2016, much higher than a USD 1.2 billion surplus a year earlier. It is the wider surplus for a November month on record and better than market expectations of a USD 3 billion. Exports recorded the biggest gain in six years while imports continued to contract. The country has been reporting trade surpluses since March last year, as a weaker real weighed down on imports but failed to boost exports.

Exports rose 17.5 percent year-on-year to USD 16.22 billion, the first anual rise in three months and the biggest gain since November of 2011. A weaker real has failed to boost sales due to lower international prices for the country's main export commodities, including soybeans, iron, oil, sugar and coffee. Yet, shipments remain around 38 percent lower than a record high reached in August of 2011. Commodities account for nearly 50 percent of total sales.
Imports slumped 9.1 percent year-on-year to USD 11.46 billion. Purchases have been falling systematically since 2014 due to a slump in the real and lower internal demand amid a severe recession. Imports fell in all months since March 2014 except in August this year (+0.4 percent year-on-year) and in September of 2014 (+9 percent year-on-year), remaining around 50 percent lower than a record high reached in October of 2013.

Considering the first eleven months of the year, exports declined 3.3 percent over a year earlier to USD 169.3 billion. Sales declined mainly for coffee (-15.9 percent); oil (-14.3 percent); soybean meal (-11.7 percent); corn (-11.1 percent); iron (-10.4 percent) and copper (-8.4 percent) but increased for platforms for oil extraction (222.7 percent); passenger cars (38.2 percent); refined sugar (22.7 percent) and airplanes (14.7 percent). Imports fell at a faster 22 percent to USD 126 billion, due to declines in purchases of fuels and lubricants (-44.9 percent); capital goods (-22 percent), consumption goods (-21.8 percent) and intermediate goods (-17.2 percent). As a result, the trade surplus increased to USD 43282 billion compared to a USD 13445 billion surplus a year earlier. 

Wednesday November 30 2016
Brazil Cuts Key Interest Rate to 13.75%
Joana Ferreira |

The Central Bank of Brazil lowered its benchmark Selic rate to 13.75 percent on November 30th, its lowest in over a year. The decision was widely expected by markets, as policymakers aim to bring inflation back to target amid a deep economic recession and a new political scandal.

The central bank began easing monetary policy during its October meeting, as it lowered its interest rate for the first time in four years. Although inflation rate slowed recently to a 20-month low of 7.87 percent in October, it remained well above the central bank's mid-point target of 4.5 percent. Furthermore, Brazil's economy shrank for the seventh consecutive quarter in the three months to September 2016, as investments dropped sharply and household consumption continued to fall.

Meanwhile, a scandal within President Michel Temer's cabinet raised fears he could lose support in Congress to push ahead austerity reforms; and added pressure on the real, which has dropped by more than 6 percent against the dollar this month. 

Inflation expectations fell to 6.72 percent for 2016 and 4.93 percent for 2017, according to the latest FOCUS Market Readout released by the central bank on November 25th. Meanwhile, the economy is expected to contract by 3.49 percent in 2016 and to grow by 0.98% next year.