2018 began without particular news from the point of view of economic indicators.
A climate of moderate optimism is maintained in view of the October 2018 presidential elections.
The Temer government continues to work for the approval of the (mini) pension reform, which should be voted in Parliament starting from the end of February. However, the necessary quorum of 308 votes in favor of the Chamber of Deputies is still far off.
Brazilian international reserves rose to US $ 382.2 billion and the “Brazil risk” index fell to 154 points, after reaching 370 points at the height of the crisis in 2015. This is a level of risk compatible with the “investment grade” attributed by the major international rating agencies (S & P, Moody’s, Fitch), but it will be necessary to wait for the presidential elections and the establishment of a government that continues its efforts to rebalance the public finances.
The trade balance recorded a positive result of US $ 67 billion in 2017, the best of the last 30 years: the lion’s share has obviously made the export of raw materials, among which stand soy, iron and oil .
It should be noted that the appeal process against former President Lula, sentenced in first instance to 9 and a half years in prison for the case of the purchase of the triplex apartment in Guaruja’, will begin on January 24th. In case of confirmation of the sentence, Lula will not be able to run for the presidential elections.
Let’s see some updated data:
GDP (Value added at market prices)
|GDP – real growth (%)||1,8%||2,7%||0,1%||-3,9%||-3,5%||1,01%||2,69%|
2017 closed with a 1% growth, not exceptional considering the performance of other emerging countries but better than the forecasts made at the beginning of the year. And above all, it marked the end of the worst recession in Brazilian history.
For 2018, the forecast is a growth of 2.69%.
Inflation and real/dollar exchange
|IPCA (IBGE – %)||5,80%||5,90%||6,40%||10,67%||6,29%||2,95%||3,95%|
Inflation 2017 at 2.95%, below the minimum threshold defined by the Banco Central range (between 3 and 6%).
For 2018 a slight increase is expected, considered physiological also due to GDP growth, which should create some tension on prices and wages.
|Exchange rate R$/US$ (end of the period)||2,04||2,34||2,66||3,90||3,25||3,25||3,32|
The real / dollar exchange rate forecasts are also stable, today at 3.25.
The euro is today quoted at around 3.90 reais, a reflection of the dolling of the dollare in the first days of 2018.
|Nominal Interest rate (end of the períod)||7,30%||10,00%||11,80%||14,87%||13,75%||7,00%||6,75%|
|Real interest (deflactor: IPCA)||2,50%||2,10%||4,20%||2,60%||6,91%||4,05%||2,80%|
There is a lot of expectation for the next COPOM meeting, to understand if the SELIC declines cycle has really ended or if Banco Central believes there is room for further reduction.
The market seems to believe that a Selic around 2018 can guarantee GDP growth without triggering tensions on inflation.
The Brazilian stock market (Bovespa)
Start of year crackling for the Bovespa, which has exceeded the historical maximum, approaching the quota never reached before: 80 thousand points.
Instead in recent days there have been sells that have reported the index below 79 thousand points.
To foster growth, the climate of optimism on the international markets.