Brazil Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Brazil Country Risk Report
Product Price
$1,195.00

Core Views

  • Widespread public unrest, sweeping corruption scandals, and deepening polarisation will keep political risk elevated over the coming quarters, weighing on investor sentiment and contributing to extreme uncertainty in terms of policy direction. Over a multiyear timeframe, the Brazilian electorate will demand progress on promised reforms, including higher-quality public services and greater government transparency.

  • Over the long-term, Brazil will only experience modest levels of growth as structural headwinds limit any quick economic solutions to the challenges faced from falling global commodity prices. Modest growth will only return to the economy following two consecutive years in recession in both 2015 and 2016.

Major Forecast Changes

  • We have downgraded our 2016 real GDP growth forecast to -4.0%, from -3.4% previously. Growth will be constrained by deep declines in investment.

  • We forecast that the real will average BRL4.000/USD in 2016, rather than our previous forecast of BRL4.600/USD. This is due a strong start to the year for the currency, as well as a significant upgrade in our current account deficit forecast. We forecast the current account shortfall will amount to 2.1% of GDP in 2016, the result of a sharp reduction in import demand.

  • While we still expect the BCB to hike rates to manage inflation, the pace of these hikes will likely be more subdued than we originally believed. We forecast an end-2016 rate of 15.00%, versus our previous projection of 15.75%.

Key Risks

  • The political situation is subject to considerable uncertainty, not least because the way it depends heavily on how courts rule on various proceedings, involving allegations of corruption and abuse of power at the highest levels of government.

  • Given Brazil's exposure to industrial metals and agricultural goods, an abrupt change to the prices of these commodities would have a major impact - either positive or negative - on the country's economic outlook.

Macroeconomic Forecasts (Brazil 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f= BMI estimate/forecast; Source: National Sources, BMI
Real GDP growth, % y-o-y 0.1 -3.8 -4.0 1.0
Nominal GDP, USDbn 2,416.0 1,772.4 1,559.1 1,629.0
Consumer price inflation, % y-o-y, eop 6.4 10.7 8.0 5.2
Exchange rate BRL/USD, eop 2.66 3.96 3.90 4.05
Budget balance, % of GDP -6.0 -10.4 -10.5 -9.1
Current account balance, % of GDP -4.3 -3.3 -2.1 -1.9
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Recession Will Deepen In 2016
8
GDP By Expenditure Outlook
10
TABLE: 10-YEAR GDP FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: GROSS FIXED CAPITAL FORMATION FORECASTS
10
TABLE: NET EXPORT FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
Fiscal Deficit To Deteriorate Amid Deepening Recession
11
Structural Fiscal Position
12
External Trade And Investment Outlook
14
Exports Set For Significant Contraction
14
Outlook On External Position
15
TABLE: FINANCIAL ACCOUNT INDICATORS
16
Monetary Policy
17
Rate Hiking Cycle Will Resume In H116
17
Monetary Policy Framework
19
Currency Forecast
20
BRL: Headed Even Lower In 2016
20
TABLE: BMI CURRENCY FORECAST
20
TABLE: BMI COMMODITY PRICE FORECASTS
21
Chapter 2: 10-Year Forecast
23
The Brazilian Economy To 2025
23
Days Of Easy Growth Are Gone
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 3: Political Outlook
25
SWOT Analysis
25
BMI Political Risk Index
25
Domestic Politics
26
Unifying PT Will Not Bolster Austerity Agenda
26
TABLE: POLITICAL OVERVIEW
26
Long-Term Political Outlook
27
Economy To Dominate Policymaking
27
Chapter 4: Operational Risk
31
SWOT Analysis
31
Operational Risk Index
31
Operational Risk
32
TABLE: OPERATIONAL RISK
32
Trade Procedures And Governance
33
TABLE: IMPORT AND EXPORT DOCUMENTS
33
TABLE: TRADE PROCEDURES BREAKDOWN
33
TABLE: LATIN AMERICA - TRADE PROCEDURES AND GOVERNANCE RISK
34
Vulnerability To Crime
35
Chapter 5: BMI Global Macro Outlook
39
Global Macro Outlook
39
Unfinished Business In 2016
39
TABLE: GLOBAL ASSUMPTIONS
39
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
40
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
40
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
41
TABLE: BRAZIL - MACROECONOMIC DATA & FORECASTS
43

Assess your risk exposure in Brazil with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Brazil with confidence.

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  • Delivery of the report in print and PDF
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