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COUNTRY INSIGHTS

The Brazilian Economy in a Turbulent World
BRAZIL ECONOMICS · Report · 14 Mar 2022

Before the war caused by the Russian invasion of Ukraine, the IMF had projected a significant slowdown of the global economy this year. With the war and the corresponding shocks to fuel and food prices, the deceleration should be greater. Before the war’s outbreak, Brazil’s monetary policy al...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 07 Mar 2022

The world is watching, shocked and apprehensive, the evolution of the war caused by the Russian invasion of Ukraine. The aggressor is an autocrat who governs in nineteenth century style with twenty-first century weapons, leading an impoverished, deindustrialized and increasingly unequal country t...

The Fiscal Situation of The States
BRAZIL ECONOMICS · Report · 22 Feb 2022

The past two years have witnessed a significant improvement in the fiscal situation of the subnational entities, which in 2021 had a primary surplus of 1.2% of GDP. This is partly due to structural improvements, such as the reforms of the civil service pension systems in some states. However, the...

Economic Activity and Inflation
BRAZIL ECONOMICS · Report · 14 Feb 2022

The latest information, including the IBC-Br, indicate that GDP in the fourth quarter probably expanded marginally, leading to growth of 4.7% in 2021. Brazil is entering 2022 with the one-year ex ante real interest rate (the rate relevant to determine economic activity) above 6.5%, an extremely r...

Inflation, Monetary Policy and Exchange Rate
BRAZIL ECONOMICS · Report · 07 Feb 2022

At the last COPOM meeting, the Central Bank did what it had announced at the previous meeting, raising the SELIC rate by 1.5 percentage points, to 10.75%. Although it announced that at the next meeting the increase will be smaller, against a backdrop of stubborn inflation and unanchoring of expec...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 31 Jan 2022

Although still in the phase of accelerated growth in the country at large, there are signs that the outbreak of the Omicron variant is stabilizing in the states of São Paulo and Rio de Janeiro. As has been detected in other countries, the new variant is highly transmissible but less lethal in peo...

Global Inflation – Control and Consequences
BRAZIL ECONOMICS · Report · 24 Jan 2022

There are no more doubts: the current global inflation does not derive from a series of independent shocks, whose effects will disappear without the need for actions by the central banks. And the rupture of supply chains is only a small part of the problem, whose main cause is the monetary stimul...

​Inflation and Economic Activity
BRAZIL ECONOMICS · Report · 18 Jan 2022

Brazil’s inflation in 2021 amounted to 10.1%, only behind Turkey and Argentina. The good news is that with the Central Bank continuing to “do whatever it takes”, inflation will decline during 2022, but the central target will only be attained again in 2023. To achieve this outcome, the SELIC rate...

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...

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...

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...

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...

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 ...

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....

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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