Brazil: Gradual activity recovery continues into Q4 - Rabobank

"The IBC-Br – BCB’s broad activity index and a high-frequency proxy for the official quarterly GDP – rose 0.3% m-o-m in October, topping the median economists’ forecasts (0.0%)," highlight analysts at Rabobank.

Key quotes

Over a period of six months, the IBC-Br moves at an annualized sequential pace of 2.1%. The growth clip recorded from the year-ago level stands at 1.4%, the strongest since mid-2014.

The data consolidates a gradual recovery after the worst recession in more than a century.

The carry-over for the IBC-Br index into 17Q4 – i.e. assuming flat readings sequential for November and December - currently stands at 0.4% q-o-q (meaning 1.4% annualized). Disregarding methodological differences that is in line with our estimate for official the GDP.

Looking ahead, effects from friendlier monetary conditions and other favourable developments on the consumer front will lend support to the economy. For the full-2017, we look for a growth of 1.1%. For 2018, we project 2.2%, taking into account a softer improvement in investment amid continued uncertainties on the political and fiscal fronts.