BRASILIA: Brazil will remain mired in a period of low growth in the coming years, due to a slowing consumer story, persistent business environment challenges, and a weaker external environment. We predict steady growth in Brazil’s shipping sector over our forecast period, although we will not see a return to the double digit growth seen in 2010 and 2011.
Our more moderated view of growth in the country’s ports is on the back of a cautious economic outlook for the country. A more substantial contraction in real GDP in Q214 than we anticipated has prompted us to revise down 2015 headline growth forecast.
We have grown increasingly pessimistic on Brazil’s economic outlook, revising down our 2015 forecast to 1.5% from 2.1%, following a weak Q214 growth print. Real GDP contracted by 0.9% year-on-year (y-o-y) in the second quarter – weaker than our expectations and Bloomberg survey estimates of -0.6% y-o-y – on the back of an 11.2% y-o-y contraction in real fixed investment. Real GDP growth will head gradually higher in the coming quarters as private consumption gets a modest boost from falling interest rates, and base effects bolster fixed investment growth. However, Brazil’s economy will continue to struggle in the face of sluggish private consumption, a weak business environment and slowing demand for Chinese metals.
