Economic Outlook in Brazil Continues with Gloomy Estimates

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Estimates by financial analysts regarding annual inflation in Brazil for 2015 have once again increased, to 8.23 percent this week, according to the latest Focus Survey, released by the Central Bank. Last week, the index had decreased for the first time in fourteen weeks, raising hopes by government officials that the recent fiscal tightening measures were starting to show results.

Since the beginning of the year, President Dilma Rousseff’s economic team has been implementing a series of fiscal policies to try to reduce inflation, decrease spending and increase the country’s primary surplus.

The economy has yet to respond to these measures. Analysts also recently raised their estimates of the retraction of the country’s Gross Domestic Product (GDP) from 1.01 percent to 1.03 percent.

The country’s industrial production is slowing down both due to the decreased in consumer spending at home and a decline in country exports. According to the Ministry of Development, Ministry and Foreign Trade (MDIC), Brazil’s trade balance for the year until the third week of April is negative.

The data, released on Monday, April 20th, shows that the country exported US$51.573 billion in goods while importing US$57.238 billion, a negative balance of US$5.665 billion.

Consumers are also making fewer plans to purchase goods in the near future, due to the increasing costs of credit. The Household Consumption Intention Index measured by the National Confederation of Goods, Services and Tourism (CNC) showed that in April consumption intention declined by 6.9 percent from the previous month, reaching its lowest level since 2010.

“The interest rates for consumers are at a very high level, and the greatest part of households, 56.1 percent, consider this an unfavorable time to purchase durable goods,” stated Juliana Serapio, economist at CNC. According to the entity all the components of the index reached their lowest levels in April.