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COUNTRY INSIGHTS

GDP in 2023 and What Can Be Expected in 2024
BRAZIL ECONOMICS · Report · 05 Mar 2024

Last year, Brazil’s GDP expanded by 2.9%, basically the same pace as achieved in 2022 (3.0%), but with peculiar characteristics. Almost one-third of the result was due to the extraordinary performance of agriculture in the first quarter of 2023, which should not repeat this year. The stagnation o...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 26 Feb 2024

OVERVIEW Despite the Carnival holiday, the political tension has remained high in February, involving decisions by Supreme Court Justice Dias Toffoli; the crisis in the relations with Israel provoked by Lula; and the operation by the Federal Police to investigate the scope and responsibility f...

Reflections of The International Scenario on Brazil
BRAZIL ECONOMICS · Report · 20 Feb 2024

When an economist with the stature of Larry Summers warns of the probability, albeit low (15%), that the Fed’s next interest rate movement might be further elevation instead of a reduction, as desired by the market, it is wise to pay attention to the reasons underpinning that comment. The main on...

The Signs of Economic Activity and Monetary Policy
BRAZIL ECONOMICS · Report · 14 Feb 2024

For inflation to converge to the target, it is necessary for economic activity to decelerate sufficiently for inflation expectations to equal the target. Although after the strong result observed in November (mainly due to Black Friday promotions), real retail sales cooled, our models indicate th...

What Will the Selic Rate Be at the End of the Easing Cycle?
BRAZIL ECONOMICS · Report · 05 Feb 2024

By raising aggregate demand, and hence the neutral interest rate, expansionary fiscal policy reduces the power of monetary policy. In 2023, the central government generated a primary deficit of R$ 230 billion, but if that result is harmonized with that determined by the Central Bank, which does n...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 29 Jan 2024

THE BET ON POLARIZATION Lula has entered 2024 facing a challenging political scenario, to say the least. Despite decent economic growth and lower inflation in 2023, his approval ratings are not comfortable, and the economic outlook for this year is more modest. Besides public money to boost de...

US Interest Rates and the Brazilian Exchange Rate
BRAZIL ECONOMICS · Report · 22 Jan 2024

Since 2022, the movements of the Real have closely followed the variations of the Dollar Index, which in turn reflects betting on the movements of the fed funds rate. Although the market wager on an early start of the easing cycle in the United States was strengthened by the comments of Jerome Po...

What Explains 2023 Growth?
BRAZIL ECONOMICS · Report · 16 Jan 2024

It is becoming increasingly clear that growth in 2023 was not due to increased potential GDP. Despite seducing influential observers, the narrative that Brazil is reaping the benefits of the maturing of past reforms cannot withstand the clear evidence that only actual GDP has been rising, derived...

The Challenges Facing the Government In 2024
BRAZIL ECONOMICS · Report · 08 Jan 2024

We’re starting 2024 – the first year of the new Fiscal Framework. Although the successive cuts of the SELIC rate have made monetary policy looser, it is still sufficiently restrictive to reduce economic growth. How will the government react to a reduction of GDP growth from 3.1% to 1.5%? The conf...

Fiscal Stimuli, Monetary Accommodation and GDP Growth
BRAZIL ECONOMICS · Forecast · 18 Dec 2023

The strong GDP growth in 2023, of 3.1%, is much more a consequence of actual GDP, spurred by aggregate demand, than by growth of potential GDP. No matter how attractive they are, the narratives about increased productivity have no empirical support. Contrary to government and household consumptio...

The GDP “Surprise” and Monetary Policy
BRAZIL ECONOMICS · Report · 11 Dec 2023

Contrary to the nearly unanimous expectation of a decline between 0.2% and 0.3%, GDP in the third quarter expanded by 0.1%, largely thanks to the robust performance of household consumption. Although that growth was also benefited by the strong increase of exports, its main cause was growth of co...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 04 Dec 2023

CHRISTMAS SHOPPING Taking advantage of the relaxed climate of year-end parties and trips, politicians in Brasília are racing to misuse the public purse, by relaxing the rules that guarantee impersonality, transparency, competition, and fiscal discipline. Even the phantoms of the “creative acco...

Interest Rates in the USA, Term Premium and Reflections on Brazil
BRAZIL ECONOMICS · Report · 27 Nov 2023

Since Brazil is integrated in international capital flows, the Central Bank’s monetary policy decisions must consider what happens in the United States, and to clarify the importance of this fact, nothing is better than an example. In 2020, against the backdrop of the pandemic, the Federal Reserv...

“...E La Nave Va”
BRAZIL ECONOMICS · Report · 21 Nov 2023

“…And the ship sails on” The IBC-Br published last week leaves no doubts: GDP growth is clearly decelerating (Graph 1). After all, the path through which the restrictive monetary policy reduces inflation is the decline of actual GDP in relation to potential GDP. Even though the successive redu...

Webinar replay - Brazil 2024 Macro Outlook
BRAZIL ECONOMICS · Report · 17 Nov 2023

How effective will Brazil's fiscal framework be? What impact will the country's monetary policy have on the interest rate by the end of the easing cycle? Visit our calendar page to watch the replay of our webinar on Brazil's macro outlook for 2024.

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