Brazil Economic Outlook Third Quarter 2014

The Brazilian economy is in stagflation, due to its significantly below potential growth rate and its rising inflation, which is well above target. We estimate that GDP will only grow at 1.3% in 2014 and, unless there is a recovery, at 1.6% in 2015. Confidence, which is below its 2009 crisis levels, is one of the barriers to increased economic momentum. Regarding inflation, it will close 2014 at 6.2%, after staying above the target range for several months. A slight moderation from the end of 2014 onwards will contribute to 2015 closing at 5.8%. It will also enable Brazil to emerge from the present stagflation.

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