Brazil: Economy is slowing, but domestic demand remains resilient | Eurobank
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Brazil: Economy is slowing, but domestic demand remains resilient

• Real GDP growth, albeit slowing, continued to be outpaced by domestic demand growth over the first half of the year.
• Recent economic indicators show clear signs that the economy slowed sharply in Q3 2011, due to the lagged effects from monetary tightening, which are amplified by the global economic uncertainty.
• Despite some temporary positive inflation news, there are significant upside risks in the inflation front.
• Given that there are still significant upside risks for inflation, the central bank is not expected to cut interest rates aggressively, unless the global economic backdrop worsens further, having a stronger hit to Brazil’s growth.