Brazil: Economy is poised to come back into positive territory – Wells Fargo

Analysts at Wells Fargo believe that the Brazilian economy is poised to come back into positive territory this year. However, the political horizon continues to cloud the forecast, they further adds.

Key Quotes

“Real GDP growth in Brazil turned positive for the first time in more than two years, leading to optimism that Latin America’s largest economy may finally be exiting its deep downturn. Strong growth in agriculture, which rose a robust  15.2 percent year over year due to a record harvest of soybeans, helped pull the country out of recession. However, high unemployment and slow wage growth weighed on household spending, which was down 0.1 percent.”

“Inflation is at a 10-year low and below the central bank’s 4.5 percent target. The government’s one-time reversal in electricity surcharges helped keep inflation well contained. Lower inflation prompted the central bank to steeply cut its benchmark rate 100 bps to  10.25 percent from 11.25 percent in June.”

“Nearly a year since ex-President Rousseff was impeached, President Temer’s future still remains uncertain as the ever-unfolding corruption scandal still looms. Public discontent remains elevated and has even led to strikes and demonstrations over labor and retirement reforms being pushed by President Temer.”