May was characterized by the truckers’ strike, which paralyzed Brazil for more than a week.

The strike was born spontaneously (but supported by the same road haulage companies), to protest against the continuous increases in the price of diesel fuel, and took on gigantic proportions, blocking deliveries and supplies of many goods, including petrol, feed for farms and basic necessities.

The Government, taken aback, reacted belatedly and was forced to make substantial concessions to the strikers (first of all the price cut of the diesel), valued in the order of about 10 billion reais (about 2.1 billion dollars ).

According to the Instituto Brasileiro de Economia (IBRE) of the Getulio Vargas Foundation, the global impact of the strike on the Brazilian economy will be between 75 and 100 billion dollars, or 0.3% of the 2018 GDP. A real tile on the recovery process of the Brazilian economy, whose growth forecasts are decreasing on + 2%, far from the 3% forecast at the beginning of the year.

Among the direct consequences of the strike, there was the resignation of the president of Petrobras, Pedro Parente. The combined effect of the forced decline in diesel prices and Parente’s resignation (much appreciated by the market for imposing a certain autonomy in the management of the company) has brought down Petrobras’ share prices, which have gone from R $ 26 in half May (PN4) at R $ 17.5 today.

In the midst of all this turbulence, the important news of the acquisition of Eletropaulo (an electricity distribution company in the state of São Paulo) by Enel is to be emphasized.

Enel won the auction, with an offer of R $ 45.22 per share, exceeding the R $ 39.53 offered by the Spanish competitor Neoenergia. The acquisition concerns 73.38% of the circulating shares, equal to about 5.6 billion reais (1.4 billion dollars). It should be noted that the shares of Eletropaulo were listed around R $ 17 before the rumors about the possible sale began.

With this transaction, Enel becomes the 1st player in the electricity distribution sector in Brazil, with 17 million customers, thus exceeding the current leader, CPFL (controlled by the chinese State Grid). For more information, here is the link with the article published by Bllomberg:

Let’s see some updated data:

GDP (Value added at market prices)

2012 2013 2014 2015 2016 2017 2018
GDP – real growth (%) 1,8% 2,7% 0,1% -3,9% -3,5% 1,01% 2,18%


The market has drastically reduced the 2018 GDP forecast, from +2.75 to +2.18. In addition to the truck drivers’ strike, other macroeconomic indicators (which indicate low-growth industrial growth) also affected this downsizing.


Inflation and real/dollar exchange 

2012 2013 2014 2015 2016 2017 2018
IPCA (IBGE – %) 5,80% 5,90% 6,40% 10,67% 6,29% 2,95% 3,65%


The interruption of supplies has caused a “flare” of the prices of some products, especially foodstuffs. Despite the end of the strike, the consequences on distribution in general are expected to last for a few weeks. For this reason, the inflation forecast at the end of the year rose from 3.49 to 3.65%, still close to the minimum threshold set by Banco Central.

  2012 2013 2014 2015 2016 2017 2018
Exchange rate R$/US$ (end of the period) 2,04 2,34 2,66 3,90 3,25 3,25 3,50


Still tension on the real / dollar exchange rate, which reflects the non-positive trend of the economy. Today the dollar is quoted at 3.73 reais, compared to 3.53 of about a month ago. The economists consulted in Banco Central’s Focus research predict that the dollar will close the year listed at 3.50 reais.

The euro has also been valued in recent weeks, and is now quoted at around 4.36 reais.


Interest rate

2012 2013 2014 2015 2016 2017 2018
Nominal Interest rate (end of the períod) 7,30% 10,00% 11,80% 14,87% 13,75% 7,00% 6,50%
Real interest (deflactor: IPCA) 2,50% 2,10% 4,20% 2,60% 6,91% 4,05% 2,85%


The discount rate (SELIC) forecast at the end of 2018 rose slightly, from 6.25% to 6.50 from a month ago. Inflation in growth (even if still under control) and the situation of the US$/real exchange rate should lead Banco Central to anticipate the growth of SELIC, which until today has only been expected in 2019.


The Brazilian stock market (Bovespa)

Even the Bovespa, which seemed almost immune to tensions in recent months, has suffered a significant decline, from 85 thousand points in early May to 78 thousand today (-8%). A significant part of the decline is due to the losses accumulated by Petrobras shares (around -35%), but the entire list is suffering, especially considering the dollar prices.

It will take a few weeks to understand if the Bovespa will have the strength to return to pre-strike quotations or if the uncertainty (also and above electoral) will prevail, aggravating the losses.