The Economic Policy Division for the Brazilian’s Central Bank has released its quarterly inflation report[i], projecting a 2,2% GDP growth for 2018. This is certainly good news, specially coming from a two-year recession and 0,7% in 2017.
The executive summary states that the set of reported indicators of economic activity is consistent with a gradual recovery of economic activity. GDP grew for the second consecutive quarter in the second quarter of 2017, which, together with high-frequency sectoral indicators, led to upward revisions in the projections for this year’s GDP growth. Also, highlighting the positive performance of the services sector, which benefited from continued recovery in retail sales, and significant expansion of household consumption, after nine quartterly drops (there is evidence that the withdraws from FGTS accounts – worker’s social security deposits – contributed to the increase in consumption).
Unempolyment rate has also receded in the quarter ending in July, with net creation of 80 thousand formal Jobs, in comparison with net destruction of 258,4 thousand Jobs in the same period of 2016. Furthermore, the evolution of the country’s external transactions remained favorable in the quarter ending in July, when the current account posted a historically low deficit, especially due to the trade surplus recorded in the period.
[i] An executive summary version of the Inflation Report – September/2017 is available in English, at the official Central Bank’s page.