Brazilian economic data suggest positive economic growth in 2018

The Brazilian economy began this year on a strong footing, with the monthly GDP proxy coming in at 3 percent year-on-year in January. In all, the data by sector appear to imply a fairly widespread rebound, with domestic demand, exports and industrial production indicating that there might finally be light at the end of the tunnel, noted Scotiabank in a research report.

Retail sales in January came in slightly below consensus expectations; however, it continued to indicate that consumers are finally making a stronger contribution, which likely comes from favorable inflation and lower interest rates that are giving some relief to still quite-levered households.

On the industrial production front, the gradual upswing continues to be true, even if the last print was slightly disappointing. In February, industrial output was anticipated at a gain of 3.9 percent, but came in at 2.8 percent. It was a moderate disappointment after the solid 5.8 percent year-on-year print. On the trade font, the rebound in commodity prices is giving Brazil’s economy a boost, raising exports around 15 percent in year-on-year terms in 2017. This impulse might wane in 2018, given commodity prices appear to have stabilized, but the volume rebound in global trade should still be positive.

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