NEWS FLASH

WEBINAR REPLAY: TURKEY 2022 OUTLOOK...

Country Insights

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The Risk of Recession in 2022
BRAZIL ECONOMICS - Report 10 Jan 2022
In a recent interview, Paulo Pichetti, a member of CODACE, stated there is no way to classify the small declines of GDP in the second (-0.4%) and third (-0.1%) quarters of 2021 as a recession. Among the reasons, he mentioned the noise introduced in the seasonal patterns (not yet captured by the r...

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The End of the Spending Cap and the Budget for 2022
BRAZIL ECONOMICS - Report 22 Dec 2021
The approval of the budget for 2022 made obvious what observers already knew. The spending cap rule was shattered, but not only to help the poorest households. The creation of the Auxílio Brasil program to replace Bolsa Família was the Trojan horse of the battle over spending. The moratorium on p...

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Inflation Heading Toward the Target and Contraction of GDP in 2022
BRAZIL ECONOMICS - Report 20 Dec 2021
In the minutes of the last COPOM meeting and in the most recent Inflation Report, the Central Bank left no doubts: monetary policy will remain in significantly restrictive territory for as long as it takes to bring inflation back to the target. However, its projections indicate GDP growth of 1% i...

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Recession and High Interest Rates in an Election Year
BRAZIL ECONOMICS - Report 13 Dec 2021
With the fiscal anchor destroyed by the Precatórios PEC, and inflation closing 2021 above 10%, the Central Bank will have to maintain monetary policy in restrictive territory for the foreseeable future. The SELIC rate at the start of 2021 was 2% and will end at 9.25%, with further increases assur...

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GDP in the Third Quarter, Elevation of the Selic Rate and Outlook for the Economy in 2022
BRAZIL ECONOMICS - Report 06 Dec 2021
Based on the indications provided by the IBC-Br, the contraction of GDP by 0.1% in the third quarter came as no surprise. However, because of the need to raise the interest rate, putting it in restrictive territory, and the recent evolution of various indicators (of confidence, industrial output ...

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Synthesis of the Brazilian Economy
BRAZIL ECONOMICS - Report 29 Nov 2021
​The recent discovery of a new Covid variant in Africa, called Omicron, has made hopes and plans for a more relaxed and festive holiday season uncertain. The large number of new mutations seems to indicate an increased dissemination pace, although there is no evidence yet of more severe symptoms....

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Trade Balance and Balance of Payments
BRAZIL ECONOMICS - Report 22 Nov 2021
The recession of 2020 undermined imports, contributing to a steep decline in the current accounts, which were not sufficient to offset the outflow of capital. With this, the balance of payments was negative, while the foreign exchange flows were partly satisfied by sales of the Central Bank in th...

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Now The Ball is in The Central Bank’s Court
BRAZIL ECONOMICS - Report 16 Nov 2021
Although Precatórios PEC destructed the fragile fiscal framework, the reactions of the foreign exchange and interest rate markets have been moderately positive. The explanation is cynically simple: “It could be worse”. With this, the Real appreciated, closing last week at R$5.45/US$, and at the l...

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What is The True Dimension of The Fiscal Problem?
BRAZIL ECONOMICS - Report 08 Nov 2021
When one speaks of fiscal unanchoring, the fear immediately arises that the country is once again headed toward “fiscal dominance”. This is not the case now, and the main reason is that the Central Bank is now formally independent and will use the instrument within its grasp – the SELIC rate – to...

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Synthesis of the Brazilian Economy
BRAZIL ECONOMICS - Report 01 Nov 2021
The news about the evolution of the pandemic in Brazil continues to be upbeat: the seven-day moving average of the number of deaths is stable at around 300, and 74% of the population has received at least one vaccine dose, while 55% have completed the immunization cycle. However, there are big di...

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The De Facto End of the Spending Cap and the Central Bank’s Reaction
BRAZIL ECONOMICS - Report 26 Oct 2021
Last week, the spending cap rule ended. The increase of the Bolsa Família program and other transfers to the needy is only part of the spending increase, whose real objective is to increase the president’s popularity and satisfy his congressional base. As could not otherwise have occurred, the ri...

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Inflation, and Interventions in the Foreign Exchange Market?
BRAZIL ECONOMICS - Report 18 Oct 2021
For some time the financial market clung to the notion that the increase of the interest rate, necessary to bring inflation to the target, would attract capital, appreciating the Real and helping the Central Bank in its task. However, since the start of the monetary tightening cycle in March, thi...

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Problems Involving the Discrepancy of the Data in the Trade Balance
BRAZIL ECONOMICS - Report 18 Oct 2021
Until 2017, the data on imports and exports gathered by the Secretariat of Foreign Commerce (Secex) of the Ministry of the Economy and by the Central Bank had few discrepancies. Since 2018, however, the two data series have been increasingly deviating from each other. While in 2020, the Secex reg...

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Monetary Policy – The Hour of Truth
BRAZIL ECONOMICS - Report 12 Oct 2021
To satisfy the inflation target at the end of 2022, after having attained the level of 8.25% at the end of 2021, the Central Bank will have to raise the SELIC rate to 9.5% at the start of next year. The cost of a “sufficiently restrictive” monetary policy will be to keep the GDP gap open during a...

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Synthesis of the Brazilian Economy
BRAZIL ECONOMICS - Report 04 Oct 2021
With a good pace of vaccination against Covid-19, 71% of Brazilians have now received at least the first vaccination dose. With this excellent adhesion, together with the widespread use of masks, for the past few weeks the moving average of daily deaths has been oscillating around 500. All the sa...