The Brazilian economy shrank 3.

8 percent year-on-year in the second quarter

of 2016, following a 5.4 percent decline in the previous period and slightly
worse than market expectations of a 3.7 percent drop. It is the 9th straight
quarter of contraction. GDP Annual Growth Rate in Brazil averaged 2.72
percent from 1991 until 2016, reaching an all time high of 10.10 percent in the
first quarter of 1995 and a record low of -5.90 percent in the fourth quarter of
2015. GDP Annual Growth Rate in Brazil is reported by the Instituto Brasileiro
de Geografia e Estatstica (IBGE).

Brazil is currently going through a deep recession. The country's growth rate has
decelerated steadily since the beginning of this decade, from an average annual growth
of 4.5% between 2006 and 2010 to 2.1% between 2011 and 2014. GDP contracted by
3.8% in 2015, and is expected to fall at least 3% more in 2016. The economic crisis, as
a result of the fall in commodity prices and an inability to make the necessary policy
adjustments, - coupled with the political crisis faced by the country - has contributed to
undermining the confidence of consumers and investors.
The Brazilian economy shrank 0.6 percent on quarter in the three months to
June of 2016, following an upwardly revised 0.4 percent decline in the
previous period and worse than market expectations of a 0.5 percent drop. It
is the sixth straight quarter of contraction although investment rose for the first
time in nearly three years. GDP Growth Rate in Brazil averaged 0.60 percent
from 1996 until 2016, reaching an all time high of 4 percent in the third quarter
of 1996 and a record low of -4 percent in the fourth quarter of 2008.

The deep recession plaguing Latin Americas largest economy continued in the second quarter of
the year, although the economy improved compared to the previous period. GDP fell 3.8% over
the same quarter of the previous year in Q2, as low commodity prices, rising unemployment and
political turmoil over the Petrobras scandal and President Dilma Rousseffs impeachment
process hampered the economy. Nevertheless, the reading marked an improvement from Q1s
steeper 5.4% fall and represented the softest contraction in a year, almost meeting market
expectations of a marginally softer 3.7% decline. Softer contractions in private consumption and
fixed investment were mainly behind the improvement, whereas public spending and the external
sector deteriorated.

On a quarterly basis, the economy contracted 0.6%, which was a deterioration over the 0.4%
drop recorded in Q1.

While Q2s data confirm that the economy remains stuck into deep recession, the fact that the
contraction eased for a second consecutive quarter suggests that Brazil might have embarked on
a lengthy road to recovery.
INFLATION

Consumer prices in Brazil rose 7.87 percent year-on-year in October of 2016,

easing from an 8.48 percent increase in September. It is the lowest inflation
rate since February last year and in line with market estimates of 7.9 percent
as cost increased less for food, transport and housing. Inflation Rate in Brazil
averaged 369.58 percent from 1980 until 2016, reaching an all time high of
6821.31 percent in April of 1990 and a record low of 1.65 percent in
December of 1998. Inflation Rate in Brazil is reported by the Instituto
Brasileiro de Geografia e Estatstica (IBGE).

As the government loosened fiscal policy, the Central Bank prematurely slashed its
benchmark interest rate in 2011-12. This pushed up inflation, which is now well above
the banks self-imposed upper limit of 6.5%, and way above its 4.5% target. The interest-
rate cut has since been reversed. Since last July the Bank's monetary policy-makers
have kept the rate at 14.25%, nearly two percentage points higher than before the
decision to cut. Alongside the lack of macroeconomic rigour, there was a lot of
microeconomic meddling: the government pursued a clumsy industrial policy and
shortchanged the private sector, for example by insisting on absurdly low rates of return
on concessions to run infrastructure projects. Small wonder confidence slumped among
businessmen.

Inflation falls to 20-month low in October

Consumer prices in October increased 0.26% over the previous month, which was above
Septembers 0.08% rise. The print was below the 0.44% increase recorded in August and
undershot market analysts expectations of a 0.28% rise. The rise in price pressures was due to
an increase in transportation prices.

Inflation fell in October to a 20-month low of 7.9% from Septembers 8.5%. Inflation has fallen
notably this year, paving the way for a cut in the Central Banks SELIC interest rate to support an
economic recovery. Despite the gains made, inflation still remains above the Central Banks
tolerance margin of plus/minus 2.0 percentage points around 4.5%.

Panelists participating in the LatinFocus Consensus Forecast see inflation closing 2016 at 7.1%,
which is down 0.2 percentage points from last months forecast. For 2017, the panel expects
inflation of 5.0%, which is down 0.1 percentage points from last months estimate.

Unemployment rate

Unemployment Rate in Brazil remained unchanged at 11.80 percent in

September from 11.80 percent in August of 2016. Unemployment Rate in
Brazil averaged 8 percent from 2012 until 2016, reaching an all time high of
11.80 percent in August of 2016 and a record low of 6.20 percent in
December of 2013. Unemployment Rate in Brazil is reported by the Instituto
Brasileiro de Geografia e Estatstica (IBGE).
The jobless rate in Brazil came in at 11.8 percent in the three months to September of
2016, below market expectations of 11.9 percent but staying at the highest level since the
series began in 2012. In the previous quarter, unemployment was lower at 11.3 percent.

Compared with the April-June period, the number of unemployed persons rose by 3.8 percent or
by 437 thousand to 12 million while employment fell by 1.1 percent or by 963 thousand to 89.8
million. Employment fell the most in agriculture (-4.2 percent to 9 million), followed by
construction (-3.7 percent to 7.14 million); trade and repair of motor vehicles (-1.8 percent to 17
million); domestic services (-2.1 percent to 6.18 million); information, communication, financial
services and real estate (-1.2 percent to 9.57 million); industry (-0.7 percent to 11.6 million) and
public administration (-0.1 percent to 15.8 million). In contrast, activities related to hotels and
restaurants added 192 thousand or 4.3 percent more jobs (to a total of 4.68 million).

People attached to the labour force, that is, either employed or unemployed but actively seeking
for job decreased by 0.5 percent or by 527 thousand to 101.8 million. In contrast, those detached
from the labour force rose by 1.2 percent or by 756 thousand to 64.64 million. The labour force
participation rate fell to 61.2 percent from 61.6 percent.

A year earlier, unemployment was lower at 8.9 percent.

BOP

Current account balance (BoP; US dollar) in Brazil was last measured at -

103981000000 in 2014, according to the World Bank. Current account
balance is the sum of net exports of goods, services, net income, and net
current transfers. Data are in current U.S. dollars. This page has the latest
recorded value, an historical data chart and related indicators for Current
account balance (BoP - US dollar) in Brazil.
Brazilian trade surplus increased by 15.2 percent to USD 2.3 billion in October 2016 from USD
2.0 billion the same month of the previous year, but missing markets consensus of USD 2.7
billion. It was the biggest surplus posted for an October month since 2011, as exports fell 14.5
percent year-on-year while imports dropped at a faster 19.1 percent. Balance of Trade in Brazil
averaged 708.77 USD Million from 1959 until 2016, reaching an all time high of 6436.65 USD
Million in May of 2016 and a record low of -4058.14 USD Million in January of 2014.