BRAZIL ECONOMICS
Analysts
Alexandre Schwartsman
Former Central Bank Deputy Governor
Cristina Pinotti
Former Chief Economist, DIVESPDatabanks
Recent Country Insights
Not So Fast
BRAZIL ECONOMICS · Report · 21 Oct 2024
After robust growth early in the year, economic activity shows some signs of slowing down in high-frequency data, largely due, we believe, to changes in fiscal policy dynamics. The first half of the year was marked by a fast expansion of public spending, which has cooled off more recently. The la...
You Reap What You Sow
BRAZIL ECONOMICS · Report · 15 Oct 2024
Recently, the Treasury has faced difficulties in placing fixed-rate or inflation-linked bonds, as their prices embed a high-risk premium. As a result, the share of Selic-linked bonds has grown rapidly, worsening the composition of public debt by reducing maturities and increasing sensitivity to i...
Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 07 Oct 2024
OVERVIEW THIS TIME IS DIFFERENT (?) Moody's decision to raise Brazil's credit rating from Ba2 to Ba1, with a positive outlook, bringing the investment grade carrot closer, was surprising and even awkward. The awkwardness stems from the risks associated with betting on a radical shift in fi...
Fiscal Easing Complicates the Central Bank’s Work
BRAZIL ECONOMICS · Report · 30 Sep 2024
The economy is growing faster than its potential, as confirmed by labor market data. In August, the unemployment rate, adjusted for seasonal effects, reached the lowest level in the series. However, the preliminary inflation data for September showed favorable signs, which we believe are temporar...
The Firm Tone of the Minutes and the Next Steps of the COPOM
BRAZIL ECONOMICS · Report · 25 Sep 2024
The COPOM minutes provided a harsh diagnosis of the inflationary environment, and there was no indication regarding the pace and magnitude of interest rate adjustments, which will depend on the evolution of the data. The Committee's description of the current scenario, characterized by resilience...
Much Ado About (Almost) Nothing
BRAZIL ECONOMICS · Report · 23 Sep 2024
The interest rate differential between Brazil and the United States has widened in recent months, a movement that tends to appreciate the real. However, our exchange rate model indicates that this effect is relatively limited, as is the impact of the decline in the Dollar Index caused by the Fed’...
Groundhog Day
BRAZIL ECONOMICS · Report · 19 Sep 2024
The Monetary Policy Committee (Copom) decided to hike the target for the benchmark Selic rate from 10.50% per year to 10.75% per year, in line with expectations from both analysts and market participants. The upward revision of the output gap estimate — thought to be near zero at the last Copo...
In the Heat of the Night
BRAZIL ECONOMICS · Forecast · 16 Sep 2024 · 1 response
Output should grow 3% in 2024, driven by domestic demand, while net imports continue to expand to accommodate the gap relative to GDP. In 2025, activity should slow down to 2%, close to its potential pace. Thus, the labor market will remain tight, with unemployment continuing to decline, while th...
Running Out Of Options
BRAZIL ECONOMICS · Report · 09 Sep 2024 · 1 response
In its last Copom meeting, the Central Bank forecasted inflation at 3.2% in the 12-month period to March 2026, assuming an unchanged policy rate. Since then, economic activity has been stronger than expected, accelerating in the second quarter, while the unemployment rate and capacity utilization...