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Marijke Zewuster became Head of Emerging Markets at ABN AMRO, suggests that Brazil’s economic figures available for the third quarter and beyond indeed point to a modest acceleration of growth with the forward-looking PMI indicator pointing to a recovery for some months now.

Key Quotes

“The manufacturing PMI rose from 49.9 in July to 52.5 in October, with 50 the threshold between growth and contraction. Consumer credit has been growing by over 10% yoy since November 2018 and rose by 15% in July. Private consumption will profit from this and from some improvement in employment figures. Retail sales increased by 2.6% in the third quarter compared to a year earlier In the first half of the year, the increase was only 0.7% yoy.”

“While a rise in industrial confidence following the election of president Bolsonaro last year led to some revival of investments, industrial production only recently started to pick up. In September, industrial production moved back to positive territory compared to a year earlier.”

“There were various factors behind the contraction in industrial production in the first half of 2019. The crisis in Argentina was negative for the automotive industry, while iron production was disrupted due to the collapse of an important dam.”

“Although the recent pick-up in investments is encouraging, it will take a while to compensate for the accumulated decline of over 30% in the period between 2014 and 2017. The third quarter GDP figures will be published in early December and will provide more clarity about the extent of the recovery.”