Brazil: Retail sales plummeted in May, data points to downside risks for GDP growth – Rabobank

According to analysts from Rabobank, incoming data in Brazil continues to highlight downside risks for GDP growth in Q2 and full-year.  

Key Quotes:  

“On the heels of a major stoppage in Brazil’s transportation system in the end of May, headline retail sales temporarily plummeted 4.9% m/m (+2.2% y/y) for that month.  Despite a visible softening recently – owing to fading effects from one-off factors that boosted consumption in 2017 – the (six-month) trends of retail sales gauges remain in growth territory (e.g. broad sales rising at annual sequential speed of 3.7%).”

“With coincident retail indicators for June confirming a rebound in the makings, we see a good likelihood that broad retail sales will post a positive quarterly sequential growth in Q2.”

“Consumer spending is certainly not as “red-hot” as some analysts had been predicting a few months ago, but it continues to advance on more constructive, gradually improving fundamentals (e.g. healing job market, lower household indebtedness, less economic distrust). In any case, with the (hard-measuring) impact from May’s transportation stoppage still being felt, the incoming data for the short term continues to highlight the asymmetrically distributed risks for GDP growth in Q2 and full-year. For now, we project 0.2% q/q for the former and 1.6% for the latter.”