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Brazil Country Risk Report 20 2018

Brazil Country Risk Report 20 2018

Brazil's economic rebound will be driven by private consumption growth and buoyant investor sentiment. However, the October elections will likely undermine confidence in the latter months of the year, posing headwinds to investment growth.

The election campaign season will heat up over the coming months, narrowing the possibility for significant legislation to advance, raising the risk of volatility shifts in investor sentiment.

The field of candidates is still unsettled, but competition among a number of relatively weak centre-right contenders raises risks that non-reform supportive candidates will advance to the second round.

The Banco Central do Brasil will most likely enact one more 25 basis point rate cut in 2018 in light of below-target inflation. However, infla-tion will likely trend upward over the coming months, leading to rate hikes in 2019.

Over the coming decade, 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.


Executive Summary
Core Views
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Buoyant Sentiment Supports Forecast Upgrade
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Rising Risk Of Capital Outflows
Outlook On External Position
TABLE: FINANCIAL ACCOUNT INDICATORS
TABLE: TOP 5 GOODS IMPORTS IN 2017
TABLE: TOP 5 GOODS EXPORTS IN 2017
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Dovish Signalling Suggests Further Cuts
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Pension Reform Defeat Signals Rising Risks
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
TABLE: MAIN AREAS OF REVENUE AND EXPENDITURE (2015)
Currency Forecast
BRL: Election Risks Will Drive Depreciation
TABLE: CURRENCY FORECAST
Chapter 2: 10-Year Forecast
The Brazilian Economy To 2027
Days Of Easy Growth Are Gone
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Election Season To Weaken Investor Sentiment
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Economy To Dominate Policymaking
Chapter 4: Operational Risk
Operational Risk
TABLE: OPERATIONAL RISK
Business Crime
TABLE: MAIN ACTIVE CRIMINAL GROUPS
TABLE: BUSINESS RESPONSE TO WHITE COLLAR CRIME AND ORGANISED CRIME
Education
TABLE: BRAZIL AND OECD AVERAGE STUDENT PERFORMANCE SCORES
Chapter 5: BMI Global Macro Outlook
Trade Tensions Take Centre Stage
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: BRAZIL – MACROECONOMIC DATA & FORECASTS

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