The shape and outlook of the labour market in particular and the overall economy of Brazil in general, offer little hope of a near-to-medium-term revival in consumption. In fact, the labour market is expected to deteriorate substantially over the next few quarters and this is bound to hit wage growth, income, and private consumption.
Further to this, the government's proposal to keep social security spending in check - in a bid to improve fiscal balances - will also hurt consumption growth over the next several quarters, expects Societe Generale. Substantial investment and growth momentum will be needed to reverse the current downward trajectory in private consumption.
