MACROECONOMIC OUTLOOK

Transcription

1 MACROECONOMIC OUTLOOK Adjustments in Brazil s economic policy in 2015 will likely produce more sustainable GDP growth rates going forward Economic Research Department - DEPEC

2 A few months ago we argued that the significant slide in confidence indicators pointed to downward revisions in GDP forecasts. Confidence readings have since declined further, amid increases in industrial inventories, uncertainties surrounding the global scenario and exchangerate volatility. Although it is difficult to establish causality between GDP and confidence levels, there is no doubt that falling confidence tends to delay the resumption of investments. In itself, this situation would already require a revision in our forecasts. But this revision became imperative last week, with the beginning of the interest-rate hiking cycle. We thus revised our main estimates for 2014 and GDP is now expected to expand 0.5% this year and 1.0% next year. Our year-end forecasts for the benchmark rate and the exchange rate now stand at 11.50% and BRL/USD 2.45 in 2014 and at 12.00% and 2.55 in Our estimates for the consumer price index IPCA point to 6.50% this year, slowing down somewhat next year to 6.30%.

3 The normalization of U.S. monetary policy will begin in 2015 (probably in the second half), in a process that will be gradual and properly signaled to markets. The magnitude of the interest-rate adjustment by the Federal Reserve is an open question, especially because of the imminentlydeflationary environment in Europe, the increase in monetary stimuli in Japan and falling oil prices. However, signals point to acceleration in U.S. growth, a stronger dollar and a moderate advance in long-term U.S. Treasury yields. Hence, emerging-market currencies tend to weaken, and even more so because of lower expected growth in China and the widespread drop in commodity prices.

4 26/11/10 26/12/10 26/01/11 26/02/11 26/03/11 26/04/11 26/05/11 26/06/11 26/07/11 26/08/11 26/09/11 26/10/11 26/11/11 26/12/11 26/01/12 26/02/12 26/03/12 26/04/12 26/05/12 26/06/12 26/07/12 26/08/12 26/09/12 26/10/12 26/11/12 26/12/12 26/01/13 26/02/13 26/03/13 26/04/13 26/05/13 26/06/13 26/07/13 26/08/13 26/09/13 26/10/13 26/11/13 26/12/13 26/01/14 26/02/14 26/03/14 26/04/14 26/05/14 26/06/14 26/07/14 26/08/14 26/09/14 26/10/14 US TREASURIES 10 YEARS TAXA DE JUROS DO TÍTULO DE 10 ANOS DO TESOURO AMERICANO Fonte: Bloomberg Em % SOURCE: BLOOMBERG, BRADESCO 4

5 CHINESE GDP China: ANNUAL crescimento anual do RATE PIB (variação OF interanual). CHANGE Fonte: Bloomberg Elaboração e projeções: Bradesco SOURCE: CEIC FORECAST: BRADESCO 5

6 The fiscal adjustment that will be necessary in the next years. The expected rebound in investments and confidence levels assumes that fiscal policy will be re-directed, focused on the sustainability of public accounts. A gradual recovery in the primary budget surplus in 2015 will be important, but even more important will be positive signals about its medium-term path, favoring perceptions and economic growth.

7 We believe the Brazilian economy will expand 1.0% in 2015, up from an estimated 0.5% this year. We acknowledge that high industrial inventories, concerns over possible rationing of water and/or electricity and the recession in Argentina intensify the challenges to domestic growth, especially in the manufacturing sector. But in our view, potentially-better signals in terms of economic policy tend to minimize the costs of the inevitable adjustment. In the final months of 2015 we will probably see stronger evidence of a pickup in growth, pointing to a better year in Yet, the labor market usually shows a lagged reaction to the slowdown in growth. The unemployment rate (measured by census bureau IBGE in its Monthly Employment Survey) is set to increase to 5.7% on average in 2015 from 4.9% in 2014.

8 * 2015* Fonte: IBGE e IPEA Elaboração BRAZILIAN e Projeção: Bradesco GDP ANNUAL RATE OF CHANGE CRESCIMENTO ANUAL DO PIB BRASILEIRO - % Média : 2,7% Média : 3,7% SOURCE: IBGE FORECAST: BRADESCO 8

9 Fonte: IBGE TAXA DE DESEMPREGO BRAZILIAN UNEMPLOYMENT RATE SIX MAJOR METROPOLITAN AREAS ANNUAL AVERAGE ( ) SOURCE: IBGE FORECAST: BRADESCO 9

10 * 2015* BRAZILIAN NET CREATION OF FORMAL JOB 000 INDIVIDUAL JOBS Em postos de trabalho GERAÇÃO LÍQUIDA DE EMPREGO FORMAL Fonte: Caged. Elaboração e projeções (*): Bradesco 2,500 2,000 2,137 1,500 1,523 1,254 1,229 1,617 1,452 1,566 1, ,000 SOURCE: CAGED FORECAST: BRADESCO 10

11 BRAZILIAN REAL WAGES ANNUAL RATE OF CHANGE Fonte: IBGE Elaboração: Bradesco RENDIMENTO MÉDIO REAL - CRESCIMENTO ANUAL 5.0% 4.0% 4.0% 3.2% 3.4% 3.2% 3.8% 4.1% 3.0% 2.7% 2.0% 1.5% 1.8% 2.0% 1.5% 1.0% 0.0% -1.0% -1.3% -2.0% SOURCE: IBGE FORECAST: BRADESCO

12 jan/10 fev/10 mar/10 abr/10 mai/10 jun/10 jul/10 ago/10 set/10 out/10 nov/10 dez/10 jan/11 fev/11 mar/11 abr/11 mai/11 jun/11 jul/11 ago/11 set/11 out/11 nov/11 dez/11 jan/12 fev/12 mar/12 abr/12 mai/12 jun/12 jul/12 ago/12 set/12 out/12 nov/12 dez/12 jan/13 fev/13 mar/13 abr/13 mai/13 jun/13 jul/13 ago/13 set/13 out/13 nov/13 dez/13 jan/14 fev/14 mar/14 abr/14 mai/14 jun/14 jul/14 ago/14 set/14 out/14 nov/14 BRAZILIAN NOMINAL WAGES ADJUSTMENTS BRADESCO SURVEY ANNUAL PERCENT CHANGE Pesquisa Proprietária REAJUSTES SALARIAIS NOMINAIS PESQUISA PROPRIETÁRIA TODOS OS SETORES AGREGADOS SOURCE: MBA / BRADESCO 12

13 United Kingdom Mexico Netherlands Germany Greece United States Taiwan France Korea, Republic of Italy Finland Portugal Belgium Spain Austria Ireland Denmark Canada Hungary Poland Sweden Switzerland Norway Israel Czech Republic Japan Philippines New Zealand Estonia Australia Slovakia Singapore Brazil PERCENT CHANGES IN HOURLY COMPENSATION COSTS IN MANUFACTURING, US$, crescimento acumulado 100% 90% 87.2% 80% 70% 60% 57.3% 63.4% 50% 40% 30% 20% 16.3% 17.4% 19.3% 21.1% 22.8% 36.3% 33.5% 25.5% 28.1% 42.1% 47.1% 10% 8.3% 0% 0.0% 13 SOURCE: BLS, BRADESCO

14 set/08 nov/08 jan/09 mar/09 mai/09 jul/09 set/09 nov/09 jan/10 mar/10 mai/10 jul/10 set/10 nov/10 jan/11 mar/11 mai/11 jul/11 set/11 nov/11 jan/12 mar/12 mai/12 jul/12 set/12 nov/12 jan/13 mar/13 mai/13 jul/13 set/13 nov/13 jan/14 mar/14 mai/14 jul/14 set/14 BRAZILIAN MANUFACTURING EXPORTS QUANTUM, INDEX NUMBER 12 MONTHS MOVING AVERAGE 2006 = SOURCE: FUNCEX, BRADESCO

15 BRAZILIAN INDUSTRIAL PRODUCTION (ANNUAL RATE OF CHANGE) Fonte: IBGE PRODUÇÃO INDUSTRIAL - CRESCIMENTO ANUAL 11.0% 10.2% 8.3% 7.0% 5.9% 3.0% 2.7% 2.8% 2.7% 3.1% 2.1% 2.5% 0.3% 0.4% -1.0% -2.3% -2.0% -5.0% -9.0% -7.1% 15 SOURCE: IBGE FORECAST: BRADESCO

16 PROJEÇÕES PMC AMPLIADA BRAZILIAN RETAIL SALES INCLUIDING AUTO AND BUILDING MATERIALS (ANNUAL RATE OF CHANGE) 15.0% 13.5% 12.0% 10.8% 9.8% 12.0% 9.0% 6.0% 6.5% 7.0% 6.8% 7.9% 3.0% 3.4% 3.6% 3.5% 0.0% 0.0% 16 SOURCE: IBGE FORECAST: BRADESCO

17 2014 RETAIL SALES (ANNUAL RATE OF CHANGE) Pharmaceutical, medical, orthopedic, perfume and cosmetic articles 8.4% Furniture and Electrodomestic appliances Fuels and lubricants Restricted Monthly Retail Survey (PMC) Hypermarkets, supermarkets, food prod, drinks and tobacco Building material 4.8% 3.8% 3.3% 2.3% 2.2% Textiles, clothing and footwear Amplified PMC 0.0% 0.9% Books, newspapers, magazines and stationery Office, IT and communications equipment and materials -2.6% -2.9% Vehicles, motorcycles, autoparts and pieces -5.4% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 17 SOURCE: IBGE, BRADESCO

18 RETAIL SALES (ANNUAL RATE OF CHANGE) Variação das vendas setoriais no comércio varejista Fonte: IBGE Elaboração: Bradesco Pharmaceutical, medical, orthopedic, perfume and cosmetic articles 7.4% Fuels and lubricants Office, IT and communications equipment and materials 4.3% 4.2% Restricted Monthly Retail Survey (PMC) Amplified PMC 3.5% 3.5% Furniture and Electrodomestic appliances Building material 2.9% 2.8% Books, newspapers, magazines and stationery Hypermarkets, supermarkets, food prod, drinks and tobacco Vehicles, motorcycles, autoparts and pieces Textiles, clothing and footwear 2.3% 2.1% 2.0% 1.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 18 SOURCE: IBGE, BRADESCO

19 nov/04 jan/05 mar/05 mai/05 jul/05 set/05 nov/05 jan/06 mar/06 mai/06 jul/06 set/06 nov/06 jan/07 mar/07 mai/07 jul/07 set/07 nov/07 jan/08 mar/08 mai/08 jul/08 set/08 nov/08 jan/09 mar/09 mai/09 jul/09 set/09 nov/09 jan/10 mar/10 mai/10 jul/10 set/10 nov/10 jan/11 mar/11 mai/11 jul/11 set/11 nov/11 jan/12 mar/12 mai/12 jul/12 set/12 nov/12 jan/13 mar/13 mai/13 jul/13 set/13 nov/13 jan/14 mar/14 mai/14 jul/14 set/14 Milhões BRAZILIAN SOCIAL MOBILITY: NUMBER OF PEOPLE IN CLASSES A,B AND C - 12-MONTHS MOVING AVERAGE Fonte: IBGE Elaboração: Bradesco EVOLUÇÃO DO NÚMERO DE BRASILEIROS NAS CLASSES A, B E C - MÉDIA MÓVEL DE 12 MESES SOURCE: PME, PNAD/IBGE, BRADESCO

20 BRAZILIAN SOCIAL CLASSES, IN MILLION PEOPLE 70% 60% * 58.9% CLASSE A: R$ OU MAIS CLASSE B: DE R$ A R$ CLASSE C: DE R$ A R$ % CLASSE D: DE R$ 701 A R$ % CLASSE E: ATÉ R$ % 37.9% 33.3% 30% 20% 20.0% 18.4% 17.9% 16.3% 11.9% 10% 3.8% 7.9% 5.7% 5.0% 4.8% 5.1% 00% Classe E Classe D Classe C Classe B Classe A SOURCE: IBGE; BRADESCO 20

21 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15* em mil toneladas Produção Nacional de Grãos BRAZILIAN GRAIN PRODUCTION Fonte e projeção: Conab Elaboração: Bradesco EM MIL TON 210, , , , , , , , , ,267 96, , , , , , ,898 90,000 70,000 68,400 57,901 76,035 81,065 78,427 83,030 50,000 30,000 SOURCE AND FORECAST: CONAB, USDA, BRADESCO 21 * Projeção

22 The IPCA will finish 2014 at the upper-limit of the target range, at 6.5%, but head to 6.3% in On one hand, regulated prices will likely continue to adjust (in 2014 part of this process was larger than we anticipated), and the same goes for the exchange rate (the main risk to our inflation scenario). 22 On the other hand, international commodity prices and adjustments in economic policy (both in the monetary and fiscal spheres) will provide downward contributions to inflation.

23 IPCA ANUAL * (NOVA AGREGAÇÃO E NOVA POF) CONSUMER PRICE INDEX (IPCA) ANNUAL PERCENT CHANGE 7.0% 6.50% 6.50% 6.30% 6.0% 5.69% 5.90% 5.91% 5.84% 5.91% 5.0% 4.0% 4.46% 4.31% 3.0% 3.14% 2.0% 1.0% 0.0% * 2015* SOURCE: IBGE, BRADESCO

24 CONSUMER PRICE INDEX (IPCA) ADMINISTERED PRICES - ANNUAL PERCENT CHANGE ADMINISTRADOS ANUAL * (NOVA AGREGAÇÃO E NOVA POF) 10.0% 9.0% 8.96% 8.0% 7.0% 6.0% 5.0% 4.27% 4.73% 6.20% 5.44% 6.40% 5.20% 4.0% 3.0% 3.27% 3.13% 3.67% 2.0% 1.0% 1.65% 1.52% 0.0% * 2015* 2016* SOURCE: IBGE, BC, BRADESCO

25 CONSUMER PRICE INDEX (IPCA) DURÁVEIS DURABLE ANUAL GOODS PRICES - ANNUAL PERCENT CHANGE % 3.61% 3.63% 3.00% 3.06% 2.50% 2.00% 2.00% 1.00% 0.94% 0.00% -0.05% -0.01% -1.00% -2.00% -1.75% -1.89% -1.55% -3.00% -4.00% -3.47% * 2015* 2016* SOURCE: IBGE, BC, BRADESCO

26 CONSUMER PRICE INDEX (IPCA) SERVICE PRICES - ANNUAL PERCENT CHANGE Serviços no IPCA 12.0% 10.0% 9.79% 8.74% 8.73% 8.0% 7.32% 6.66% 6.77% 8.10% 6.73% 8.02% 8.07% 7.40% 7.00% 6.0% 5.54% 5.72% 5.79% 4.86% 4.0% 2.0% 0.0% * 2015* 2016* SOURCE: IBGE, BC, BRADESCO

27 CONSUMER PRICE INDEX (IPCA) ALIMENTAÇÃO FOOD DOMICÍLIO ANUAL PRICES - ANNUAL PERCENT CHANGE % 20.0% 19.46% 18.0% 16.0% 14.0% 12.0% 10.0% 9.63% 10.77% 11.12% 10.39% 9.86% 8.0% 7.48% 7.19% 8.48% 7.94% 7.74% 7.00% 6.0% 4.0% 3.87% 3.17% 2.0% 0.0% 1.99% 1.23% * 2015* 2016* SOURCE: IBGE, BC, BRADESCO

28 OUTLOOK FOR INTEREST RATE AND EXCHANGE RATE 28 28

29 The Central Bank s Monetary Policy Committee (Copom) will tighten at a pace of 25 bps per meeting, ending 2014 at 11.50% and reaching 12.00% by March The minutes of the November meeting, which started the tightening cycle, did not provide details on the total size of the adjustment. However, we assume there will be some contribution from fiscal policy, so that the burden on monetary policy could be lighter. In that sense, we expect the public sector s primary budget surplus to increase to 1.25% of GDP next year from 0.25% this year. The fiscal effort in 2015 will be important, but even more important will be government signals regarding the medium-term sustainability of public accounts. Hence, the federal budget in 2015 should come with a viable promise of inter-temporal adjustment, which would lead to stabilization in the public sector s net debt/gdp ratio in coming years.

30 mar-08 jun-08 set-08 dez-08 mar-09 jun-09 set-09 dez-09 mar-10 jun-10 set-10 dez-10 mar-11 jun-11 set-11 dez-11 mar-12 jun-12 set-12 dez-12 mar-13 jun-13 set-13 dez-13 mar-14 jun-14 set-14 dez-14 mar-15 jun-15 set-15 dez-15 Cenário básico para a taxa de juros - Selic BRAZILIAN NOMINAL INTEREST RATE (SELIC) % 13.75% 13.00% 13.0% 12.0% 11.75% 11.0% 10.0% 9.0% 8.0% 7.0% 12.75% 11.25% 10.25% 9.50% 8.75%8.75% 10.25% 10.75% 11.25% 12.50% 12.00% 11.00% 10.50% 9.75% 9.00% 8.50% 8.00% 7.25% 8.50% 8.00% 10.75% 11.00% 10.50% 10.00% 9.50% 9.00% 12.00% 11.50% 6.0% SOURCE: BCB FORECAST: BRADESCO 30

31 PRIMARY SURPLUS SUPERÁVIT AS % OF PRIMÁRIO GDP EM % DO PIB - SELL SIDE 4,0% 3,7% 3,8% 3,5% 3,0% 2,9% 3,2% 3,4% 3,2% 3,3% 3,2% 3,3% 3,4% 2,7% 3,1% 2,5% 2,4% 2,0% 2,0% 1,9% 1,5% 1,3% 1,0% 0,5% 0,0% ,3% SOURCE: BACEN

32 Assuming gradual normalization of U.S. monetary policy and adjustments in the domestic economy, our year-end forecasts for the exchange rate stand at 2.45 in 2014 and 2.55 in These levels may be enough to sustain the external debt/gdp 1 ratio at current levels next year, and the trade balance near zero (our estimates are a deficit of $2.4 billion in 2014 and a surplus of $1.0 billion in 2015). The risk here is toward further depreciation. But if a worse scenario materializes, the Central Bank may extend its intervention program, using FX swap contracts. If this new direction of economic policy comes through, the weakening move in the Brazilian currency would likely be cushioned.

33 08/11/09 08/12/09 08/01/10 08/02/10 08/03/10 08/04/10 08/05/10 08/06/10 08/07/10 08/08/10 08/09/10 08/10/10 08/11/10 08/12/10 08/01/11 08/02/11 08/03/11 08/04/11 08/05/11 08/06/11 08/07/11 08/08/11 08/09/11 08/10/11 08/11/11 08/12/11 08/01/12 08/02/12 08/03/12 08/04/12 08/05/12 08/06/12 08/07/12 08/08/12 08/09/12 08/10/12 08/11/12 08/12/12 08/01/13 08/02/13 08/03/13 08/04/13 08/05/13 08/06/13 08/07/13 08/08/13 08/09/13 08/10/13 08/11/13 08/12/13 08/01/14 08/02/14 08/03/14 08/04/14 08/05/14 08/06/14 08/07/14 08/08/14 08/09/14 08/10/14 08/11/14 BRAZILIAN NOMINAL EXCHANGE RATE - R$/US$ DECEMBER 2008 R$ 2.34 / US$ DECEMBER 2009 R$ 1.74 / US$ DECEMBER 2010 R$ 1.67 / US$ DECEMBER 2011 R$ 1.88 / US$ DECEMBER 2012 R$ 2.04 / US$ DECEMBER 2013 R$ 2.34 / US$ DECEMBER 2014 R$ 2.45 / US$ DECEMBER 2015 R$ 2.55 / US$ SOURCE: BLOOMBERG FORECAST: BRADESCO

34 BRAZILIAN NOMINAL EXCHANGE RATE - R$/US$ SOURCE: BLOOMBERG FORECAST: BRADESCO

35 TRADE BALANCE US$ BILLION 55,000 50,000 45,000 44,703 46,457 40,032 40,000 35,000 30,000 25,000 20,000 15,000 10,000 13,121 24,794 33,641 29,807 24,836 25,290 20,147 19,395 5, ,000-1, ,650 2,561-2,378 1,040-10,000-6,575-15,000 SOURCE: BLOOMBERG, BRADESCO 35

36 BRAZILIAN CURRENT ACCOUNT DEFICIT (IN USD MILLION) 20, ,811 11,679 13,985 13,643 4,177 1,551-7,637-20,000-40,000-18,384-23,502-30,452-33,416-25,335-24,225-23,215-24,302-28,192-60,000-80, ,000-47,273-52,480-54,283-81,379-84,661-84,503-82,044-66,821-70,552 SOURCE: BCB, BRADESCO FORECAST: BRADESCO 36

37 * 2015* 2016* 2017* 2018* FOREIGN DIRECT INVESTMENT US$ million 80,000 70,000 66,660 65,272 63,996 64,200 60,000 69,000 71,07073,202 60,000 50,000 45,058 48,506 40,000 30,000 20,000 10,000 32,779 28,856 28,578 22,457 16,590 10,144 18,146 18,822 15,066 34,585 25,949 0 SOURCE: BCB, BRADESCO 37

38 DEPEC-BRADESCO: MACROECONOMIC SCENARIO (average) GDP% CPI (IPCA) % WPI (IGP-M) % Nominal rates (Selic) % Industrial Production % % Unemployment rate % % BRL (R/US$) average BRL (R/US$) eop Exports (US$ Bn) Imports (US$ Bn) Trade balance (US$ Bn) Current account (US$ Bn) Current account % of GDP % International Reserves (US$ Bn) FDI (US$ Bn) CRB (Average) n/a Crude Oil (WTI US$/b) - Average n/a Fiscal balance % of GDP Net Public debt % of GDP Credit outstanding %YoY Non-performing loans Households 15.9% 20.5% 13.2% 10.2% 7.6% 5.0% 5.0% 6.9% Companies 1.6% 13.2% 20.1% 17.0% 8.0% 5.4% 5.4% 5.5% Estimation based on information available until 10 th November,

39 DEPEC - BRADESCO does not accept responsibility for any actions/decisions that may be taken based on the information provided in its publications and projections. All the data and opinions contained in these information bulletins is carefully checked and drawn up by fully qualified professionals, but it should not be used, under any hypothesis, as the basis, support, guidance or norm for any document, valuations, judgments or decision taking, whether of a formal or informal nature. Therefore, we emphasize that all the consequences and responsibility for using any data or analysis contained in this publication is assumed exclusively by the user, exempting BRADESCO from all responsibility for any actions resulting from the usage of this material. We all point out that access to this information implies acceptance in full of this term of responsibility and usage. The reproduction of the content in this report (partially or in full) is strictly forbidden except if authorized by BRADESCO or if the sources (the name of the authors, publication and BRADESCO) are strictly mentioned. Updated 10 th November, 2014