Country Insights

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Pension Reform: A good version approved by the Special Committee and the challenges ahead
BRAZIL ECONOMICS - Report 17 Jun 2019
​Last week the rapporteur of the Pension Reform Proposal presented his opinion to the Special Committee. The version urged in his opinion was somewhat watered down in relation to the government’s original proposal, but it would still lead to significant savings over the next 10 years, of over R$ ...

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Weak growth and monetary easing ahead
BRAZIL ECONOMICS - Forecast 10 Jun 2019
In a climate of decelerating world growth, with rising risk aversion and a sharp decline in Treasuries yields, we have redone our projections for growth for 2019 and 2020. In them we assume that despite all the political noise, a robust pension reform will be approved, reducing the fiscal risk. A...

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Worse Global Scenario and Contagion to Brazil
BRAZIL ECONOMICS - Report 10 Jun 2019
Since the second half of 2018, the global PMI has been repeatedly reduced, accompanied by a decline of industrial production growth rates, indicating continuing deceleration of world growth. The IMF and World Bank have also frequently revised the expectations for world growth downward for this ye...

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Synthesis of the Brazilian Economy
BRAZIL ECONOMICS - Report 03 Jun 2019 1 response
Some signs of good sense have started to appear on the political stage. Although it is too soon for celebrations, we hope the recent improvement is not just a series of random events, but instead reflects some learning by the actors involved. The retraction (0.2%) of GDP in the first quarter, wit...

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Is the economy recovering?
BRAZIL ECONOMICS - Report 03 Jun 2019
​From a technical standpoint, Brazil is not in a recession, and possibly will not enter this phase of the economic cycle in the next quarter, when there should be slight (and mediocre) growth. However, although a double dip is not in sight, the recovery of economic activity is disappointing to sa...

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The pension reform war and other battles
BRAZIL ECONOMICS - Report 28 May 2019
The approval of a robust reform of the social security system is crucial to set the stage for renewed economic expansion. Measured by the insignificant growth of per capita income, the Brazilian economy is nearly in a depression, and faster growth depends on investments revival, something that wi...

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The depression after the recession
BRAZIL ECONOMICS - Report 17 May 2019
The dating of economic cycles in Brazil is carried out by the Committee for Dating Economic Cycles (CODACE), which has pinned down the start and finish of all cycles since 1980. It is customary to measure the magnitude of recessions by the distance between the peak and valley in the phase of fall...

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The frustrating economic activity and the Central Bank’s reaction function
BRAZIL ECONOMICS - Report 13 May 2019
Economic activity continues to disappoint, and based on the information available so far, it is perfectly possible that GDP contracted in the first quarter. This has prompted a wave of downward revisions in the growth projections for 2019, to the neighborhood of 1%. Another consequence is the ine...

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Synthesis of the Brazilian Economy
BRAZIL ECONOMICS - Report 06 May 2019 1 response
Following years of fiscal irresponsibility, leading to stagnant economic growth, an adjustment of the public accounts is a necessary condition for the country’s social stability. Faced with the challenge of defending unpopular measures, Bolsonaro has failed and at the same time precociously fritt...

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Caution over the contradictory signs from the labor market
BRAZIL ECONOMICS - Report 06 May 2019
During the entire phase of the weak cyclical recovery, job creation has been disappointing. However, the data from the Continuous PNAD announced last week presented a ray of hope: if employment growth is maintained until de end of the year at the pace of the first quarter, the unemployment rate w...

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The Real: Excessive fluctuation? Excessive depreciation?
BRAZIL ECONOMICS - Report 29 Apr 2019 1 response
Last week there was a particular strengthening of the dollar against other currencies. The dollar appreciation combined with the domestic risk due to the fiscal and political uncertainties hastened the depreciation of the Brazilian real, which exceeded the level of R$4.00/US$, prompting clamor fo...

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The magnitude of the fiscal effort needed and the perspectives for success
BRAZIL ECONOMICS - Report 22 Apr 2019
​When the Temer administration realized that without controlling expenditures it would be impossible to end the explosive growth of the public debt, it submitted a proposed constitutional amendment to Congress in order to freeze primary spending in real terms. This was a correct choice, given tha...

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GDP growth between 1% and 1.5% in 2019
BRAZIL ECONOMICS - Report 18 Apr 2019
Analyzing the latest data, along with the recent performance of activity and the perspectives for the coming quarters, we have revised our growth projection for 2019 downward. The interval of our new projection is between 1% and 1.5%, with bias towards the lower limit​. At the end of 2018 ther...

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Monetary Policy: Smooth sailing ahead
BRAZIL ECONOMICS - Report 15 Apr 2019
Despite the general acknowledgment that the recent inflation elevation is all due to passing shocks, the question has arisen: Will these shocks be incorporated into inflation expectations? Shocks that are absorbed into expectations become inflation expressions, but for this outcome the economic r...

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Synthesis of the Brazilian Economy
BRAZIL ECONOMICS - Report 09 Apr 2019
Following a number of unimaginable errors and blunders, which eroded a relevant part of his popularity, President Bolsonaro has emitted some positive signs in the past few days. The future of the economy and the government itself depends on the establishing of a less erratic presidency. The econo...