Brazil: Unwinding the imbalances

Brazil has not yet emerged from a two-year long recession, the worst on record. Optimism about a vigorous rebound in production is taking an increasingly dim view. Investment plunged by -10.3% and has been the worst performing component in 2016. Private and public consumption decreased by -4.3% and -0.6% respectively. Imports contracted -10.4% while exports expanded by +1.6%. 

However, the fall in real GDP moderated and confidence and production indicators that hit rock bottom early in 2016 are now gradually bottoming out. Both private consumption and investment are estimated to become the engines of growth in 2017 and push the economy back into positive territory.