Brazil’s Confidence Indexes Show Mixed Projections in 2017

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – As Brazilians brace for another difficult year ahead, confidence indexes released this past week show no clear tendencies. While some, like the retail sector, are optimistic in relation to next year, others like consumer confidence and industry confidence registered declines during the end of 2016 and beginning of 2017.

The National Confederation of Industry (CNI), for example, estimates a weak growth, expansion of 1.3 percent in industry, next year. “The year 2017 will be characterized by a very difficult beginning,” concluded a special report released by CNI in December.

According to the entity, a gradual recovery of the activity is expected for the second half of the year, driven by lower inflation and lower interest rates. “The fiscal issue will remain critical and a source of destabilization and uncertainty in the long term,” according to the CNI study.

The latest consumer confidence index measured by Fundação Getulio Vargas (FGV), also shows consumers weary of the country’s economic situation both currently and in the coming year. The Current Situation Index for December, fell by 3.8 points to 64.1 points, the lowest ever recorded by FGV.

The Expectations Index, which measures confidence in the future, fell by 6.9 points to 80.8 points. The overall Consumer Confidence Index fell by 5.8 points in December to 73.3 points, on a scale of zero to 200. This is the lowest level of the indicator since June of this year.

On the other hand the confidence index for the retail sector, also measured by FGV, increased by 0.7 percentage points in December, showing that retail services are more optimistic about what 2017 will bring. The positive performance of the indicator was concentrated in five of the thirteen segments.

Retail services businessmen are more confident with the future, with the Expectations Index, reaching 90.6 points. Sales optimism over the next three months rose by 3.1 points.