Brazil: Growth trends remain positive - Rabobank

Analysts from Rabobank, point out that in spite of weak (back-to-back) monthly headlines, growth trends remain positive regarding industrial production in Brazil. 

Key Quotes: 

“Industrial production (IP) inched higher by 0.2% m/m (+2.8% y/y) in February, disappointing market expectations and suggesting a soft start to the year in Brazilian industry.”

“Headline IP trends remain strong, nevertheless. The 3-month (seasonally adjusted) figures point to an annualized growth pace north of 8% q/q, whereas the even less volatile 6-month average clip accelerated to 5.0% annualized.”

“We estimate that the carry-over5 of industrial production for 18Q1 is now 0.1% (or 0.3% annualized), contrasting with a quarterly gain of 1.6% (6.6% annualized) for 17Q4. While we continue to focus more on the less-volatile trends than the monthly figures themselves, it seems hard to deny that industrial activity has been a bit slow for Q1. We believe the soft industrial production early in 2018 is consistent with a less steep than expected recovery for this year. We project Q1 GDP up 0.5-0.6% (i.e. 2.0-2.5% annualized) and a full-year expansion of 2.2%, below the consensus of 2.8%.”