top of page

Updated economic indicators – 2023, November 7

At the meeting of the Monetary Policy Committee (COPOM), which ended on November 1, 2023, the Central Bank decided to reduce the discount rate (SELIC) by a further 0.50%, bringing it to 12.25% per annum. It is the third reduction in a row, after those of August and September 2023.


The International Monetary Fund (IMF) has increased its 2023 Brazilian GDP growth forecast, bringing it from +2% to +3.1%.


For 2024 the estimate is an increase of 1.5% compared to 2023.


The unemployment rate recorded in the July-September 2023 quarter fell to 7.7%, the lowest level in the historical series since February 2015 (7.5%). Employment grew in almost all sectors of the economy, with the notable exception of industry, where the loss of 66,000 jobs was recorded. A new signal of Brazil’s deindustrialization process, which we will talk about in a specific article.


Inflation was stable, recording +5.05% at the end of October compared to the previous year. The good news is that the rise in prices in the service sector is also starting to slow down, as is that of fuel. If this trend were to be confirmed, inflation could quickly approach the Central Bank’s goal.


In September the public accounts recorded a positive balance of 11.5 billion reais, after four consecutive months of deficit. In the first nine months of 2023, the primary deficit (not counting interest payments) amounts to approximately 93.4 billion reais.


Thanks to the increase in the price of commodities and the growth in the volume of exports, the Brazilian trade balance should close the year with a surplus of at least 80 billion dollars, with the possibility of reaching 90. The exceptional year of agriculture (harvest volume 19% higher than that of 2022) has given a great boost to exports and is the cornerstone of the significant growth in GDP in 2023.


If the economy in general is progressing decisively, the trade sector is not doing the same. After a January with strong growth (+4%), in the following months there were slight fluctuations but no robust growth. This confirms that GDP growth is linked above all to the excellent performance of the agri-food sector, without major repercussions on family wealth and consumption.


The tax reform is expected to be approved by the Senate by mid-November. Given that there will be changes and additions, the text will then have to return to the Chamber of Deputies for final approval.


On 4 October 2023, the bill aimed at creating a regulated market for greenhouse gas emissions, known as PL 412, was approved by the Federal Senate’s Environment Committee (CMA).



The Chinese car manufacturer BYD, Tesla’s main rival in the production of electric vehicles, has taken over the former Ford factory in Camaçari, state of Bahia. The initial investment will be 3 billion reais and involves the remodeling of the production lines to make it possible to manufacture three models: the hybrid flex Song and the electric Dolphin and Yuan. In a second phase, the construction of a factory for the processing of lithium necessary for electric batteries is planned.


The drought is affecting the most important river in Latin America, the Amazon, which is also the main route for the transport of goods. The industrial center of Manaus, where household appliances and motorcycles are produced at a preferential tax regime, is unable to distribute goods to other areas of Brazil and is starting to suspend some production lines. If the situation does not change in the next few weeks there could be problems for sales during the Christmas period.


Here is the trend of the main economic indicators:


GDP (Value added at market prices)




The Brazilian GDP growth forecast for 2023 is stable, estimated at +2.89% per year (against +2.92% a month ago). The agri-food and services sectors performed well, while the performance of the industrial sector worsened.


Inflation and real/dollar exchange





The inflation growth forecast drops again, falling to +4.63%. For 2024 the forecast is for even more limited growth: +3.91.


The dollar is quoted today (7 October 2023) at R$ 4.89, a significant devaluation compared to a month ago (R$ 5.15).


The good health of the Brazilian economy could lead to a further strengthening of the real, but doubts regarding the government’s fiscal policy weigh on the currency’s performance. President Lula has repeatedly declared that fiscal balance is not a priority and this attitude worries the markets and also the Central Bank.


The euro is quoted today at R$ 5.24, a significant devaluation compared to a month ago (R$ 5.40).


Interest rate





The discount rate (SELIC) was raised to +12.25% and a new cut of 0.50% is expected at the next meeting of the Central Bank’s Monetary Policy Committee (COPOM).


The market therefore expects Selic to close 2023 at 11.75%, 0.50% less than today.


The forecasts for the end of 2024 see Selic at 9.25%, a value that is still very high and which would leave real interest rates still among the highest in the world.


The Brazilian stock exchange (Bovespa)


The Ibovespa closed the session of November 6, 2023 at 118,431 points, +4.4% compared to the closing at the beginning of October (113,419 points on October 3, 2023). Growth in the period was +10% in dollars and +7.5% in euros.


The growth was concentrated in the first days of November, when the American FED “softened” its position regarding the path of interest rates and the Central Bank reduced the discount rate (SELIC) by 0.5%.


Hamas’s aggression against Israel initially also had repercussions in Brazil, especially regarding tensions over oil prices. As the probability of an expansion of the Middle Eastern conflict is reduced, the markets have stabilized.


If there are no further external shocks and if the government maintains its commitment to pursuing fiscal balance also in 2024, the last two months of 2023 could be very positive for Brazilian assets.

bottom of page