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. 




Wednesday February 08 2017
Brazil Inflation Rate At Near 4-1/2-Year Low Of 5.35%
IBGE | Joana Taborda | joana.taborda@tradingeconomics.com

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 | joana.taborda@tradingeconomics.com

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 | joana.taborda@tradingeconomics.com

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 | joana.taborda@tradingeconomics.com

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.