BRAZIL ECONOMICS
Analysts
Alexandre Schwartsman
Former Central Bank Deputy Governor
Cristina Pinotti
Former Chief Economist, DIVESPDatabanks
Recent Country Insights
The consequences of reaching above the limit
BRAZIL ECONOMICS · Report · 13 Jan 2025
The reduction in the trade balance surplus in 2024 is largely explained by import performance. We estimated a model to project the growth of imported quantum, aiming to analyze its relationship with economic growth and movements in the real exchange rate. The model indicates that a 1% increase in...
Upside down
BRAZIL ECONOMICS · Report · 20 Dec 2024
In recent weeks, suspicions that we are operating under a fiscal dominance regime, or very close to it, have surfaced. However, we still do not believe this to be the case, despite monetary policy weakening in face of fiscal policy mismanagement, which has rapidly increased the costs of disinflat...
The dance of solitude
BRAZIL ECONOMICS · Report · 17 Dec 2024
The Copom minutes, a laborious document, revealed a worrisome view of inflation. In the Committee's words: "that a further deterioration in the inflation scenario has occurred, as reflected in inflation expectations and projections. It concluded that the shorter-term determinants – such as the...
Bad moon rising
BRAZIL ECONOMICS · Report · 16 Dec 2024
Our fears, expressed in the September Quarterly Outlook, regarding the overheating of the economy, have materialized. Today, there are more signs that the economy is operating above its potential—a phenomenon acknowledged by the Central Bank itself. It revised its estimates of the output gap f...
We are still here
BRAZIL ECONOMICS · Report · 13 Dec 2024
The Central Bank not only raised the interest rate by 1 percentage point—against a majority, albeit not unanimous, expectation among analysts of a 0.75 percentage point hike—but also committed itself to two additional hikes of the same magnitude in upcoming Copom meetings. This decision was made ...
The Battle of Expectations
BRAZIL ECONOMICS · Report · 09 Dec 2024
Since the last Copom meeting, the inflationary outlook has worsened due to deteriorating inflation expectations, currency depreciation, and the persistence of strong economic activity and labor market, stressing the output gap. As a result, BCB’s inflation forecast for the relevant monetary polic...
More Of The Same
BRAZIL ECONOMICS · Report · 04 Dec 2024
GDP growth in the third quarter of the year slightly exceeded expectations, at 0.9%, compared to the second quarter, against analysts' median estimate of 0.8%, with no major revisions to the most recent data. However, 2023 growth was revised upward to 3.2% from the initial estimate of 2.9%. Sh...
Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 02 Dec 2024
OVERVIEW PT TESTS ITS POWER, AND THE COUNTRY BEARS THE COST Even after emerging significantly weakened from the municipal elections, as discussed in the November Fotografia, PT (Workers’ Party) imposed its vision on the final design of the fiscal package, increasing the risks and costs in t...
Winston Churchill’s Wisdom
BRAZIL ECONOMICS · Report · 29 Nov 2024
The long-postponed "fiscal adjustment package" has finally come to light. The reaction was so negative that some suggested another postponement would have been a better option. The first conclusion we draw, as we will explore further, is that the magnitude of the promised adjustment falls shor...