26.07.2016

Positive forecast for Brazil's economy in 2016 and 2017

While the Olympic Games in Rio de Janeiro are about to start, Brazil is experiencing the deepest recession in its economy for over a century, with GDP already set back by 3.8% last year and presumably down 3.3% this year.

Unemployment in the quarter ended in May rose to record 11.2%, while inflation in June stood at 8.84%, despite the Selic rate of the central bank have long been at 14.25%.

Still, the latest survey carried out by the central bank of 100 local financial institutions have identified a turning point in the crisis: for the next year, the market expects a return to growth of 1%, in contrast with recent months, when the forecast was the third consecutive year of recession.
For inflation, the expectations indicate a drop to 13.25% at the end of this year and to 11% by 2017. In last January, the trend growth of prices had increased to 10.7% and that with the exception of May, since then there has been a steady slowdown.

Public accounts, however, do not bring enthusiasm: if the ratio of debt to GDP is expected to be this year to 69%, in 2017 it will still be up to 76.6%, due to a deficit currently at double digits and that to be cut austerity appears the only available recipe.

Meanwhile, the São Paulo stock exchange recorded a + 31% while the real-dollar strengthened by 22% change, demonstrating that the suspension of President Dilma Rousseff was registered as a sign of a possible change. Impeachment would therefore no longer an outcome unlikely and could come as early as later this summer.


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