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

  • 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. Growth will only return to the economy following a two consecutive years in recession in both 2015 and 2016.

  • The Banco Central do Brasil will back down from its promise to cut rates in 2016 and will instead hike the benchmark Selic rate by 150 basis points in 2016. Inflation has continued to accelerate despite the bank's attempts to stymie price increases through over 700 basis points of rate hikes in the past two years. Capital has continued to flow out of Brazil, putting depreciatory pressures on the real, feeding through to rising import costs.

  • The widespread public protests that took place in June 2013 marked a turning point for the Brazilian electorate. Public unrest will flare up intermittently until significant progress on promised reforms, including higher-quality public services and greater government transparency, begins to take shape. In line with this view, an ongoing corruption scandal at national oil company Petrobras will continue to drive public protests in the coming months.

Major Forecast Changes

  • We have downgraded our 2015 real GDP growth estimate to -3.1%, from -2.7% previously. Significant labour market deterioration helps to underpin this forecast change, as private consumption will be more subdued than we previously anticipated.

  • We now expect Brazil recession to deepen in 2016, revising our real GDP contraction in 2016 to be 3.4%.

  • We have revised up out benchmark Selic rate forecast for 2016. We now expect the Banco Central do Brasil to hike rates to 15.75% from 14.25%. This is a revision from our previous expectation for the bank to begin a rate cutting cycle in 2016 to spur growth.

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 -3.1 -3.4 1.5
Nominal GDP, USDbn 2,345.5 1,748.6 1,330.8 1,466.0
Consumer price inflation, % y-o-y, eop 6.4 9.1 8.0 5.2
Exchange rate BRL/USD, eop 2.66 3.96 4.40 4.05
Budget balance, % of GDP -6.2 -8.4 -8.7 -7.3
Current account balance, % of GDP -4.4 -4.3 -6.2 -5.5
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Rousseff Presidency Will Survive Political Turmoil
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
11
Economy To Dominate Policymaking
11
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Index
15
Economic Activity
16
Downgrade Will Exacerbate Weak Economic Outlook
16
Fiscal Policy
17
Rising Interest Costs A Challenge, But Credit Event Unlikely
17
TABLE: FISCAL POLICY
18
Fiscal & Debt Profile
20
Balance Of Payments
21
Painful Adjustments Amid BoP Mismatch
21
Outlook On External Position
22
TABLE: CURRENT ACCOUNT INDICATORS
22
TABLE: FINANCIAL ACCOUNT INDICATORS
23
Monetary Policy
24
Risks Of Rate Hikes Rising
24
Monetary Policy Framework
25
TABLE: REGULATED PRICES IN IPCA INDEX
25
TABLE: WEIGHTING OF IPCA INDEX, %
25
FX Forecast
26
BRL: Near-Term Bounce Unsustainable Without Structural Reform
26
TABLE: BMI CURRENCY FORECAST
26
Chapter 3: 10-Year Forecast
29
The Brazilian Economy To 2024
29
Q415: Days Of Easy Growth Are Gone
29
TABLE: LONG-TERM MACROECONOMIC FORECASTS
29
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: OPERATIONAL RISK
34
Education
36
TABLE: LATIN AMERICA - EDUCATION RISK
36
TABLE: GRADUATES OF TERTIARY EDUCATION
37
Government Intervention
40
TABLE: LATIN AMERICA - GOVERNMENT INTERVENTION RISK
41
TABLE: PERSONAL INCOME TAX BRACKETS
42
Chapter 5: BMI Global Macro Outlook
45
Global Outlook
45
Global Growth Weak As EMs Squeezed
45
TABLE: GLOBAL ASSUMPTIONS
45
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
46
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
47

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, PDF and online formats
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  • Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report