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Mixed Retail Sales Data From Brazil

James Boston
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Mixed Retail Sales Data From Brazil

Brazilian Retail Sales figures just released for May indicate a gradual but continuing pick up in the consumer economy. The year on year number has been posted as 4.8% compared to an April reading of 6.7% growth and a consensus estimate for just 3.7%. Month on month these figures have been reported as 0.5% growth for May against an April contraction of -0.4% and a market estimate of -0.1%.

These retail sales figures pre-date much of Brazil’s hosting of the World Cup but it is likely that a portion of the May data will capture some of the pick up from international visitors to the country. The trending up of the retail sales data throughout the course of the year can largely be attributed to an increase in economic activity due to the preparations for this global event, Brazilian government sources claim that up to one million jobs have been added due to the construction of World Cup venues and infrastructure. It is most likely that a large proportion of these new jobs are non-permanent in nature and a recent survey showed that most Brazilians considered the World Cup as having a detrimental impact on the economy. The reality is that the most expensive version of the contest held to date went massively over budget and this will take the economy a long time to recoup.

Fundamentally, Brazil had been struggling with growth prior to any major project. First quarter GDP this year came in at a reasonably healthy 1.90% but full year estimates for 2014 have already been revised down from 1.45% to 1.25% and the 2015 forecast has been changed from 1.80% to 1.70%. Economic growth over the earlier part of the last decade however is leaving this country with a lot of scope to weather it’s short term sluggishness.

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