The month of March was rather turbulent, characterized by signs of possible institutional conflicts between executive, legislative and judicial.

Between Bolsonaro and Maia, president of the Chamber of Deputies, there was a lively verbal confrontation on the respective roles to assume for the approval of the pension reform. For Bolsonaro there is no need for articulation by the Government, interpreted as an expression of the “old politics” and a source of corruption and misuse of public money; Maia, on the contrary, rejects the role of articulator of the proposed law, in conflict with his institutional role “super partes”. As was feared, the Bolsonaro government is facing serious difficulties in finding the necessary votes for the approval of the reform (308 out of 513): if this government inertia should remain, the time for approval of the reform will be very long.

The markets are increasingly aware of the difficulties of the government and have expressed their concern in the only way possible to them: sharp fall in stock indices (about -7%) and real devaluation (-5% against the dollar).

To calm the markets and come out of an institutionally risky situation, Bolsonaro and Maia have then announced a truce, but few believe that Bolsonaro can hold back long from manifesting new bizarre behavior.

The arrest and subsequent release of former President Temer also contributed to generating uncertainty and concern. The arrest warrant, which proved to be unjustified from a procedural point of view, was interpreted as a signal from the magistrates conducting the “Lava-jato” investigation against the TSF (Tribunal Superior Federal), which recently decided that the trials that involve electoral crimes must be conducted under the control of the TSE (Tribunal Superior Eleitoral), which weakens – in the opinion of the magistrates of the “Lava-jato” – the trial process against politicians and entrepreneurs involved.

In the midst of all this confusion, the popularity of the Bolsonaro government diminishes: only 34% of those interviewed by the IBOPE (research institute and polls) consider his work to be excellent or good. In January it was 49%, in February 39%. This is the worst assessment of a presidential term since Fernando Collor’s time.

On the economic front, the country’s unemployment rate is growing at 13.1% according to the quarterly survey of the IBGE, corresponding to 13.1 million people. This is the third consecutive quarter of unemployment growth.

Let’s see the update of some economic indicators.

GDP (Value added at market prices)

2013 2014 2015 2016 2017 2018 2019
GDP – real growth (%) 2,7% 0,1% -3,9% -3,5% 1,01% 1,30% 2,00%

Another reduction in the 2019 GDP growth forecast, which – according to Banco Central’s weekly research “Focus” – stands at + 1.98% (it was + 2.5% at the end of January and + 2.3% at the end February). Even the Ministry of Economy (normally more optimistic) has reduced the forecast to + 2.2%.

Inflation and real/dollar exchange 

2013 2014 2015 2016 2017 2018 2019
IPCA (IBGE – %) 5,90% 6,40% 10,7% 6,29% 2,95% 3,69% 3,89%

Despite the ups and downs of the economic operators’ mood and thanks to the work of Banco Central, expectations regarding inflation are still well anchored. Although slightly up, the inflation forecast in 2019 is still well below 4%.


2013 2014 2015 2016 2017 2018 2019
Exchange rate R$/US$ (end of the period) 2,34 2,66 3,90 3,25 3,25 3,75 3,70

The dollar is quoted today at R $ 3.87, up from the prices of a month ago. The market still forecasts a quotation of R $ 3.70 for the end of 2019. At the height of the Bolsonaro-Maia clash the dollar exceeded the quotation of R $ 4.00, but – thanks to the intervention of Banco Central and the attempt to reconcile – it soon returned below the R $ 3.90 threshold.

We recall that the quotation of the dollar is a thermometer of the mood of the market, concerned with the real capacity of the Bolsonaro government to articulate the approval of the pension reform.

The euro is now listed as R $ 4.34, also appreciating against the real.


Interest rate

2013 2014 2015 2016 2017 2018 2019
Nominal Interest rate (end of the períod) 10,00% 11,80% 14,87% 13,75% 7,00% 6,50% 6,50%
Real interest (deflactor: IPCA) 2,10% 4,20% 2,60% 6,91% 4,05% 2,81% 2,51%

The discount rate forecast (SELIC) at the end of 2019 remained stable at 6.5%. At least until the pension reform is approved, no discount rate cuts are expected; on the contrary, if the reform were to delay, possible inflationary tensions could push Banco Central to increase SELIC.


The Brazilian stock market (Bovespa)

On 18 March 2019, the stock index (Ibovespa) exceeded 100,000 points for the first time in history, even though it ended the trading day just below this threshold.

However, a series of negative news (the arrest of Temer, a dispute between Bolsonaro and Maia, above all) caused a certain panic, so much so that the ovespa closed the session of March 27th with just over 92 thousand points.

Today (April, 1st) it is around 96 thousand points (around 94 thousand at the beginning of March).