Brazil: Robust rebound

GDP grew in the second quarter, following a decline in the previous two. Activity rebounded robustly on the back of resilient private consumption and an ongoing recovery in industrial production, which had contracted sharply in the previous months. Capacity utilisation is approaching pre-crisis levels in a number of manufacturing sectors. Investment has nevertheless yet to recover. Domestic demand is set to grow vigorously in the last quarter of 2009 and into 2010, supported by a still accommodative policy mix.

The monetary easing cycle came to an end in September, following a cumulative 500 basis-point cut in the policy interest rate over the previous 12 months. Fiscal outcomes continue to weaken due to cyclical factors, a ratcheting-up of recurrent expenditure, especially the central government payroll, and the discretionary measures that have been put in place in response to the global crisis. The end-year fiscal target is therefore unlikely to be met. A judiciously planned withdrawal of policy stimulus would be advisable from early 2010, if the recovery is well in hand, as expected.

©OECD Observer 2010

Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.2% Jan 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.5% Jan 2018
Last update: 12 Mar 2018


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