Good morning! Today, markets are braced for Brazil’s Q3 GDP results, as the outlook is bleak. Bolsonaro finally gets his man on the Supreme Court. Another mass resignation among Brazilian researchers. Taxis popular again amid tough times for ride-hailing apps.
Technical recession for Brazil?
The Brazilian Institute of Geography and Statistics (IBGE) will release Brazil’s Q3 GDP results today, and the risk of a technical recession is real. The Central Bank’s economic activity index (IBC-Br), a reliable GDP predictor, registered a drop of 0.14 percent during Q3. If that estimate holds up, it would be Brazil’s second negative quarter in a row.
Forecasts. Finance newspaper Valor polled 46 financial institutions on their GDP forecasts, which ranged from -0.6 to +0.3 percent — but only 13 institutions expected any growth.
Why it matters. Brazil has shown itself unable to resolve any of the issues which hindered GDP growth in Q2: rampant inflation, more brutal monetary tightening than anywhere else in the world, and massive political and fiscal uncertainty.
Problem. Brazil managed to stay somewhat afloat last year thanks to heavy doses of government stimulus. But the country has not been able to jumpstart activity since aid money ran dry, due to...