The Brazilian GDP figure for the second quarter of 2022 exceeded expectations, marking + 1.2% compared to the previous quarter. Growth in the service sector (+ 1.3%), the industrial sector (+ 2.2%) and investments (+ 4.8%) and household consumption (+ 2.6%). With the now generalized reopening caused by the improvement of the health situation and the increase of the “auxilio Brasil” (now at R $ 600 per month) a mini-boom is taking place involving consumer goods and services (restaurants, bars, tourism , etc.).
Good news on the Brazilian public debt front. In July 2022 it was equal to 77.6% of GDP, the lowest percentage since the beginning of the pandemic. Net of the interest on the debt, the result for the month of July is even better: a net surplus of about 5 billion euros. An important signal of Brazil’s financial stability that could strengthen the value of its currency.
Inflation is also down: the IPCA-15 index in August recorded a deflation of 0.73%, the highest since the start of the historical series in 1991.
Inflation fell to +9.60% annually, finally back below the double digits.
Two elements of the basket mainly contributed to causing the drop in prices: fuels and energy (the same ones that had caused the surge in prices at the beginning of 2022).
The prices of food products, on the other hand, are still growing, + 1.12% in August compared to the previous month.
The unemployment rate is still decreasing, from 9.3% in June to 9.1% in July 2022. It is the lowest level since the last quarter of 2015. Average income also tends to increase: + 2.8% compared to to the quarter ended April 2022, but is still below pre-pandemic levels. more employed, but with lower average wages and in sectors characterized by informality.
Presidential elections: the electoral campaign has begun and Lula’s advantage over Bolsonaro tends to diminish.
According to the latest Datafolha research, released on September 1, 2022, in the first round the gap between Lula and Bolsonaro fell to 13 points compared to 18 points a month ago. Lula has 45% of the preferences, Bolsonaro 32%; followed by Ciro Gomes (9%) and Simone Tebet (5%).
The possibility of a victory for Lula in the first round is therefore removed.
According to the poll, in a possible second round Lula would win with 53% of the votes, followed by Bolsonaro with 38%; also in this case the gap between the two candidates has narrowed, going from 20% at the beginning of August to 15% today.
As expected by some economic analysts, the gap has narrowed due to the economic support measures implemented by the government and the decrease in inflation.
Here is the trend of the main economic indicators:
GDP (Value added at market prices)
|GDP – real growth (%)||-3,3%||1,3%||1,8%||1,4%||-4,1%||4,5%||2,26%|
The GDP growth forecast for 2022 is still improving, estimated today at + 2.26% (a month ago it was + 1.97%).
The positive performance of the Brazilian economy is due more to internal factors (consumer stimuli, complete reopening of commercial activities, increase in tourism, etc.) than external ones (the demand for commodities and related prices are falling due to the European crisis. and the slowdown in the Chinese economy).
Inflation and real/dollar exchange
|IPCA (IBGE – %)||6,29%||2,95%||3,69%||4,20%||4,38%||10,0%||6,61%|
The year-end inflation estimate is confirmed to be down. The drop in the price of oil continues and therefore transport costs are also decreasing, allowing companies to reduce costs.
The forecast for 2022 is down sharply compared to a month ago, at + 6.61%.
|Exchange rate R$/US$ (end of the period)||3,25||3,25||3,75||4,01||5,19||5,57||5,20|
The dollar is quoted today (6 August 2022) at R$ 5.15, a slight decrease compared to a month ago (R$ 5.28). The appreciation of the Brazilian currency is therefore maintained compared to the historical lows of the beginning of 2021, when the dollar was quoted at R$ 5.69.
By the end of 2022, the estimate of the dollar price remains stable at R $ 5.20.
The euro (now below parity with the dollar) is quoted today at R $ 5.12, down compared to a month ago (R $ 5.37) and still far below the price at the beginning of the year (R $ 6.42).
|Nominal Interest rate (end of the períod)||13,75%||7,00%||6,50%||4,50%||2,00%||9,25%||13,75%|
|Real interest (deflactor: IPCA)||6,91%||4,05%||2,81%||0,3%||-2,4%||-0,75%||7,14%|
The year-end forecast of the economists consulted by Banco Central is that there will be no further adjustments until the end of 2022.
Only in 2023, with inflation under control, should a cycle of decline in SELIC begin.
If the forecasts were to be respected, the real interest rate at the end of 2022 should reach 7.14%, a record for the last 6 years.
The Brazilian stock exchange (Bovespa)
Another positive month for Brazilian equities, in contrast to the American and European stock exchanges.
Ibovespa closed the session on September 5, 2022 at 112,203 points, +5.4% compared to the close at the beginning of August (106,472 points on August 5, 2022). Growth in the period was +5.7% in dollars and + 8.2% in euros.
The improvement of the Brazilian economy has been the driving factor for the growth of the Bovespa index in the last two months: the decisive intervention of Banco Central, which raised interest rates months before the FED and the ECB, made it possible to anticipate the “cooling” of inflation without jeopardizing the growth of the economy.
However, for September the unknown factor remains of the international economic crisis and the final rush of the Brazilian presidential elections, the first round of which will take place at the beginning of October.