The Organization of the Petroleum Exporting Countries (OPEC) in its July Monthly Oil Market Report (MOMR) revised down its Brazil 2020 economic growth forecast from a 6.0% decline to a 6.7% contraction. The Brazilian statistical office reported a seasonally adjusted 6.0% quarter-on-quarter economic contraction in Q1, with the decrease expected to deepen in Q2. The low recovery is forecast to continue in 2021, with growth forecast at a modest 2.4% rate.
The country has remained largely impacted by COVID-19, with infections expected to continue rising. This means that lockdown measures will likely dampen its industrial activity for a longer period. Industrial output fell by 27.3% year-on-year in April and 21.8% year-on-year in May. Brazil’s June manufacturing PMI rose to 51.6, from 36.0 in April and 38.3 in May. Meanwhile, the services PMI rose slightly to 35.9, from 27.4 in April and 27.6 in May.
Brazil’s commodity-dominated exports decreased by 13.8% year-on-year in April and 1.9% year-on-year in May, in US-dollar terms. Meanwhile, retail sales dropped 23.8% year-on-year in April and 12.2% year-on-year in May. These data paint a gloomy outlook in Brazil’s economic recovery, which is expected to start by H2 at earliest, though it is not expected to compensate for the deep fall in H1.
