The Markets • 3 MIN READ

The Markets #1

The Markets is a new series that compares a Brazilian market with international equivalents and aims to offer our readers unexpected opportunities both in and outside Latin America’s largest economy. For this introductory edition, we take a macro-economic view of what’s going on at home and across the globe to set the scene before we take a tour of some of the world’s most fascinating sectors.


Despite difficulties experienced with COVID and widespread mistrust of the central government, Brazil’s economy actually grew by 1.2 per cent in the first quarter of 2021. This was faster than economists expected, as services and investments took Latin America’s largest economy back to pre-pandemic levels. It was the third consecutive quarter of growth and in a recent interview, Jason Vieira, chief economist at Infinity Asset Management in São Paulo said, “This makes the outlook for the coming quarters very positive.” Brazil’s employment numbers are also looking relatively healthy having recovered from 81.6 million in August of 2020 to almost 88 million in June of this year.

Brazil’s real rose to 5.15 to the dollar and currently sits at 5.23, a sharp recovery since last March. Economists at Citi and Goldman Sachs increased their 2021 GDP growth forecasts to 5.1 per cent and 5.5 per cent. And Paulo Guedes, Brazil’s Economy Minister, confirmed this with his own forecast of between 5 per cent and 5.5 per cent in July.


Brazil’s first-quarter growth was driven by services, industry and fixed business investment. According to The Brazilian Institute of Geography and Statistics (IBGE), agriculture grew by 5.7 per cent in the quarter, the fastest jump in four years. Industry expanded by 0.7 per cent, the dominant services sector grew 0.4 per cent and fixed business investment rose 4.6 per cent in the quarter.

Economists warned, however, that tightened fiscal policy, rising interest rates and uncertainty surrounding the pandemic were risks that could lead to more conservative growth in 2022.

The rest of the world

Vaccine access splits the global recovery in two — those that can look forward to further normalization later this year in more advanced economies and those that still face a rise in infections and resulting COVID deaths.

As such, the global economy is projected to grow 6 per cent in 2021 and 4.9 per cent in 2022.

Prospects for emerging markets and developing economies have been marked down for 2021, especially in Asia. By contrast, the forecast for advanced economies was revised upwards.

Recent pressures reflect unusual pandemic-related developments. Inflation is expected to return to its pre-pandemic ranges in most countries in 2022. Elevated inflation is also expected in some emerging markets. A double hit to emerging market and developing economies from worsening pandemic dynamics and tighter external financial conditions would severely set back their recovery and drag global growth below the current outlook.

Projections of Individual country growth (%)202020212022
Advanced Economies-
Euro area6.54.64.3
– Germany-
– France-
– Italy-8.9 4.94.2
– Spain-
United Kingdom-
Other advanced economies-
Emerging and developing Asia-
Emerging and developing Europe-
Latin America-
Middle East and Central Asia-
Saudi Arabia-
Sub-Saharan Africa-
South Africa-

Source: IMF

Brazil is in the midst of a solid post-COVID recovery but the forecast for 2022 is more conservative than any other major economy. Next year could see more insecurity, not least if we factor in the inevitable turbulence of a general election at a time when the country craves some stability. Beyond politics, it is vital that strong sectors of growth such as agriculture and manufacturing help to buoy an otherwise uncertain outlook.