Softness in Brazilian imports point towards still weak production and consumption environment domestically

The Brazilian economic performance expectation has been further dampened by the recent political noise in the country. The upcoming economic activity index, which is a proxy for overall GDP growth, for the month of May is thus going to have vital implications for the remainder of the year after many volatile readings in the initial four months, noted Wells Fargo in a research report.

Taking a look at the trade data, it is evident that exports have been helping economic activity in the first half of the year. But the softness in imports indicate towards a still weak production and consumption environment domestically. Moreover, the recent escalation in political tensions with the recent prosecution of the president would further exert pressure on the economy, even if the process does not end with any serious terminal crisis for President Michel Temer, stated Wells Fargo.

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