The Signs of Economic Activity

BRAZIL ECONOMICS - Report 19 Jun 2017 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

Last week was filled with positive data on April’s economic activity, suggesting the recovery recorded in the first quarter might extend to the second. Along with the continuing fall of the interest rate, other forces are also acting in the direction of economic recovery, but even though the worst of the recession might be over, caution is in order regarding demarcating the start of renewed growth and its intensity. First, the improvement of the various confidence indicators is based predominantly on the expectations component, which might be affected by the current political crisis. Second, our leading indicator has been losing strength. And third, the methodological change in the surveys of commerce and services conducted by the IBGE has introduced noise that is hard to decipher, making it difficult to extract the correct signs about the trajectory of these variables.

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