BRAZIL ECONOMICS
Analysts
Alexandre Schwartsman
Former Central Bank Deputy Governor
Cristina Pinotti
Former Chief Economist, DIVESPDatabanks
Recent Country Insights
COPOM Watch: Bad Omens
BRAZIL ECONOMICS · Report · 12 Nov 2024
While the statement following last week’s Copom meeting was virtually identical to the previous meeting's (albeit with a slightly more critical tone toward fiscal policy), the minutes brought some changes compared to its previous incarnation. These changes, while not suggesting any commitment reg...
A (Near) Perfect Storm
BRAZIL ECONOMICS · Report · 12 Nov 2024
Inflation forecasts point to a high likelihood of exceeding the upper limit of the target this year. Meanwhile, the Central Bank's inflation projection for the 12 months ending in June 2026, the relevant horizon for monetary policy, is 3.6%, indicating the need for an adjustment of approximately ...
Between a Rock and a Hard Place
BRAZIL ECONOMICS · Report · 07 Nov 2024 · 2 responses
There were no surprises in the Copom’s decision: as expected, the committee raised the target for the benchmark interest rate by 0.50 percentage points, from 10.75% to 11.25% per year, without providing further indications about its next steps or the total extent of the monetary tightening cycle....
Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 04 Nov 2024
OVERVIEW THE CONFIDENCE CRISIS STILL WAITS FOR AN ADEQUATE RESPONSE The decline of the Workers' Party (PT) in the municipal elections at the end of October added a significant element to the political landscape. The major winners were the Social Democratic Party (PSD), known as the “Kassab...
Depending on the Kindness of Strangers
BRAZIL ECONOMICS · Report · 28 Oct 2024 · 1 response
Recent behavior of the U.S. dollar and interest rates indicates that external factors' contribution to the appreciation of Brazil's exchange rate are likely to be lower than expected. Along with data showing robust activity and labor market conditions, increased odds of Donald Trump winning the p...
Not So Fast
BRAZIL ECONOMICS · Report · 21 Oct 2024
After robust growth early in the year, economic activity shows some signs of slowing down in high-frequency data, largely due, we believe, to changes in fiscal policy dynamics. The first half of the year was marked by a fast expansion of public spending, which has cooled off more recently. The la...
You Reap What You Sow
BRAZIL ECONOMICS · Report · 15 Oct 2024
Recently, the Treasury has faced difficulties in placing fixed-rate or inflation-linked bonds, as their prices embed a high-risk premium. As a result, the share of Selic-linked bonds has grown rapidly, worsening the composition of public debt by reducing maturities and increasing sensitivity to i...
Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 07 Oct 2024
OVERVIEW THIS TIME IS DIFFERENT (?) Moody's decision to raise Brazil's credit rating from Ba2 to Ba1, with a positive outlook, bringing the investment grade carrot closer, was surprising and even awkward. The awkwardness stems from the risks associated with betting on a radical shift in fi...
Fiscal Easing Complicates the Central Bank’s Work
BRAZIL ECONOMICS · Report · 30 Sep 2024
The economy is growing faster than its potential, as confirmed by labor market data. In August, the unemployment rate, adjusted for seasonal effects, reached the lowest level in the series. However, the preliminary inflation data for September showed favorable signs, which we believe are temporar...