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Macroeconomic outlook report: Brazil

Second quarter of 2017

In the second quarter of 2017, Brazilian economy recovered from the recession that started in 2Q14, reaching a y/y growth rate of 0.23%, 0.64 p.p. above that of the previous quarter.  This behaviour was driven by the improvements of private consumption and exports, as well as by the deceleration of imports. Industrial production recorded a y/y growth of 1.13%, decreasing by 0.37 p.p. with respect to the previous quarter. The unemployment rate interrupted its ascending trend in 2Q17, improving by 0.70 p.p. with respect to 1Q17, to a rate of 13%. The Brazilian Real depreciated compared to the US dollar, recording an exchange rate of 3.21 R$/US$. Inflation in Brazil has decreased for the sixth consecutive quarter, down to a rate of 3.56% in 2Q17.

Macroeconomic overview

  • The y/y growth rate of Brazilian GDP during 2Q17 reached 0.23%, 0.64 p.p. higher than the rate recorded in 1Q17, which represents the first positive growth rate recorded since 2014. The recovery of GDP growth was driven by the improvements recorded in private consumption and exports, together with the deceleration of imports.
  • Industrial production registered a y/y growth rate of 1.13 % in 2Q17, recording a positive growth rate besides a quarterly deceleration of 0.37 p.p.
  • Regarding the Brazilian labour market, the unemployment rate interrupted its ascending trend in 2Q17, decreasing by 0.70 p.p. compared to 1Q17, down to a 13% rate. Meanwhile, the y/y growth rate of employment remained negative at a rate of
    -2.11%, despite a slight recovery of 0.81 p.p. in comparison with 1Q17.
  • The exchange rate of the Brazilian real against the US dollar increased when compared to the previous quarter, registering a value of 3.21 R$/US$, which represents a depreciation of 0.07 R$/US$. The depreciation of the real against the dollar is due to the divergence between the expansive and restrictive monetary policies being implemented by the Central Bank of Brazil and the Federal Reserve respectively.
  • Brazilian inflation decreased for the sixth consecutive quarter, declining by 1.33 p.p. over the previous quarter to 3.56%. This trend reflects lower growth both of market prices (services, industrial goods and food) as well as of regulated prices, especially those of fuel.

For more information access the executive document in pdf (avalaible in Spanish and Portuguese).