According to analysts at Rabobank, for the Brazilian economy, a Supreme Court’s “green light” for the government’s privatization program was good news for an economic agenda focused on greater investment and better productivity.
Key Quotes
“For the coming week, the macro calendar features mainly events on the realm of real activity. The highlight is the release of April IBC-Br – the BCB’s monthly economic activity index (Fri.). We look for a sequential gain of 0.4% m/m, meaning +0.7% y/y. This result implies an annualized quarterly contraction of 4.0% q/q, suggesting that the April gain also reflects a payback to weak recent readings.”
“In politics, the House’s Special Commission could see the pension reform report sometime this week. Yet the chances of a delay are significant. Financial markets will (continue to) pay close attention to the items that Congress will supress (or change) from the Executive’s original proposal. That will be a guide for the expected efficacy (i.e. from a cost-savings standpoint) of this reform. Our scenario counts on BRL 800 billion in expected savings for the next ten years, about in line with consensus and consistent with our BRL forecast of 3.70/USD for end-2019.”
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