fernanda nechio - banco central do brasil › conteudo › home-ptbr › ... · 2020-04-20 ·...
TRANSCRIPT
1
Brazil: Economic outlook
Fernanda NechioDeputy Governor for International Affairs and Corporate Risk Management
April 20, 2020
Economic outlook
Brazil before Covid-19
Improving fundamentals, gradual recovery, inflation within target
Pandemic impact
Virus spread
Economic impact
Response to the crisis
Central Bank guaranteeing liquidity and financial stability
Government implementing measures to mitigate the economic impact
What´s next?
Overview
3
Brazil before the pandemic
Gradual economic recovery
Source: IBGE / ME
Gradual economic recovery… … in all sectors(Net employment – thousands)
-800
-600
-400
-200
0
200
400
600
800
1.000
Dec
-12
Jun
-13
Dec
-13
Jun
-14
Dec
-14
Jun
-15
Dec
-15
Jun
-16
Dec
-16
Jun
-17
Dec
-17
Jun
-18
Dec
-18
Jun
-19
Dec
-19
Industry
Civil construction
Commerce
Services
Agriculture
-10
-8
-6
-4
-2
0
2
4
6
8
10
-2,5
-2,0
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
Mar
-10
Dec
-10
Sep
-11
Jun
-12
Mar
-13
Dec
-13
Sep
-14
Jun
-15
Mar
-16
Dec
-16
Sep
-17
Jun
-18
Mar
-19
Dec
-19
GDP (quarterly) left
GDP (yoy) right
Improving fundamentals with reform agenda
Labor market reform
Spending cap law
Comprehensive pension reform
Divestments and privatization program
Foreign exchange market modernization (in Congress)
Other: credit registry law, trade agreements, improvements in business conditions,
OECD liberalization benchmarks convergence
Accommodative monetary policy and inflation within target range
Source: BCB
Main policy rateHeadline inflation and expectations
2
5
8
11
14
set
14
mar
15
set
15
mar
16
set
16
mar
17
set
17
mar
18
set
18
mar
19
set
19
mar
20
Selic rate3.75%
0
1
2
3
4
5
6
7
8
9
10
11
Jun
06
Jun
07
Jun
08
Jun
09
Jun
10
Jun
11
Jun
12
Jun
13
Jun
14
Jun
15
Jun
16
Jun
17
Jun
18
Jun
19
Jun
20
Jun
21
Jun
22
realized
market expectations*
Comfortable international position
CA deficit more than financed by FDI(US$ billion)
Sizable buffers against shocks(US$ billion)
-120
-100
-80
-60
-40
-20
0
20-20
0
20
40
60
80
100
120
1995 2000 2005 2010 2015 2020
Milh
ares
FDI
Current Account Deficit(inverted)
-200
-100
0
100
200
300
400
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Foreign Reserves Repo Lines
FX Swaps Others
Net FX Position ARA
ARA 100% - 150%
312.97(Apr 8, 2020)
Liquid and well-capitalized banking system
4
8
12
16
20
Dec2017
Mar Jun Sep Dec2018
Mar Jun Sep Dec2019
%
Total Capital Ratio Tier 1 Capital Ratio
Common Equity Tier Ratio Leverage Ratio
Capital Ratios
Source:BCB
0
200
400
600
800
1.000
1.200
0,00
0,50
1,00
1,50
2,00
2,50
Dec2013
Jun Dec2014
Jun Dec2015
Jun Dec2016
Jun Dec2017
Jun Dec2018
Jun Dec2019
BRL billionLiquidity ratios
Liquid assets Stressed outflows Liquidity ratio (right axis)
un.
9
The pandemic impact
Early in the contagion curve
Progressão internacional da Covid-19
Sources: WHO, Brazilian Ministry of Health
Austria
France Iran
JapanDenmarkMalaysia
Netherlands
Norway
Korea
Sweden
UKSwitzerland
Singapore
United States
Spain
China
Italy
Brazil
100
1,000
10,000
100,000
0 7 14 21 28 35
Speed of Spread – Covid-19 TrackerReference date: April 2nd
Number of days since the 100th case
*Numbers as of April 12, 2020
Uneven but widespread contagion
Confirmed cases
38.654
Deaths
2.462
Lethality
6,4%
*Numbers of April 19, 2020 Source: Brazilian Ministry of Health
Accumulated cases since the first case
Confirmed cases Deaths
Source: BCB/Derin
Severe strains in emerging markets
Source: Bloomberg, DERIN, Thomson Reuters
-3,5
-3,0
-2,5
-2,0
-1,5
-1,0
-0,5
0,0
0,5
1,0
1,5
Ap
r-1
7
Jul-
17
Oct
-17
Jan
-18
Ap
r-1
8
Jul-
18
Oct
-18
Jan
-19
Ap
r-1
9
Jul-
19
Oct
-19
Jan
-20
Ap
r-2
0
stan
dar
d d
evia
tio
n
Risk appetite indicator
EM
AE
-60
-40
-20
0
t t+15 t+30 t+45 t+60 t+75 t+90
US$
bill
ion
Days after event
Accumulated non-resident portfolio flows to EM* since indicated date
GFC (9/8/08)
Taper Tantrum (5/17/13)
China Scare (7/26/15)
COVID-19 (1/21/20)
* Daily net total flows for Mexico, Korea, Taiwan, India, Indonesia, South Africa, Thailand, Phillipines, Sri Lanka, and Vietnam; daily equity flows for Brazil, UEA, Malaysia, Ukraine, and Pakistan.
Source: BCB/Derin
Deep impact in prices of main financial assets
Source: Thomson Reuters
-5
0
5
10
15
20
25
30
35
Jan-20 Feb-20 Mar-20 Apr-20
EME currencies**
10%-90%InterquantileMedianMeanBRLDXY
-50
-40
-30
-20
-10
0
10
Jan-20 Feb-20 Mar-20 Apr-20
EME equity indexes*
10%-90%
Interquantile
Median
Mean
IBOV
* Composite of equity indexes of China, Hong Kong, India, Indonesia, Malasia, Mongolia, Pakistan, Philippines, Sri Lanka, South Korea, Taiwan, Thailand, Vietnam, Bosnia, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Romania, Serbia, Slovak, Turkey, Ukraine, Argentina, Brazil, Chile, Colombia, Mexico, Peru, Venezuela, Panama, Abu Dhabi, Egypt, Ghana, Israel, Jordan, Kenya, Kuwait, Lebanon, Mauritius, Morocco, Nigeria, Oman, Qatar, Saudi Arabia, South Africa, and Tunisia.
** Composite of currencies of Brazil, Mexico, Argentina, Chile, Colombia, Peru, China, Hong Kong, Taiwan, India, Indonesia, South Korea, Malaysia, Singapore, Thailand, Philippines, Russia, Turkey, Czech Republic, Bulgaria, Romania, Hungary, Poland, and South Africa.
Feb/2Mar/1
Feb/27Mar/26
Feb/2Mar/1
Feb/27Mar/26
Feb/2Mar/1
Feb/27Mar/26
Soft data signaling severe economic impact
Source: Cielo, proprietary data.
Non-durable goods ServicesDurable goods
Quarantine
preparation
Feb-20, seasonally adjustedMar-20
SMTWTFS SMTWTFS SMTWTFS SMTWT SMTWTFS SMTWTFS SMTWTFS SMTWT SMTWTFS SMTWTFS SMTWTFS SMTWT
Nominal sales by sector(Cielo Index Feb 2=100)
15
Response to the crisis
Timely and robust BCB response
For details see: https://www.bcb.gov.br/en/about/covid-19-measures
2020 2008
Liquidity support
Term-deposit reserve requirements from 31% to 25% and
regulation enhancements on Liquidity Coverage Ratio (LCR) 135 -
Term-deposit reserve requirements from 25% to 17% 68 82
Regulatory easing on Agrobusiness Credit Bills 2.2 -
Loans backed by financial notes guaranteed by sovereign bonds
and debentures670 -
Repos with sovereign global bonds 50 25
Term deposits guaranteed by deposit insurance (NDPGE) 200 10
Repo backed by debentures and reserve requirements 91 -
Total 1216.2 117
% GDP 16.7% 3.5%
Capital relief
Overhedge 520 -
Decline of Capital Conservation Buffer 637 -
Total 1157 0
% GDP 15.8% 0%
Exemptions for new loan-loss provisions 3.2* -
Other measures
Swap line with the Fed US$ 60 bi US$ 30 bi
Credit line for SMEs R$ 40 bi -
(R$ billion)
Amounts
Measures:
Credit markets responding to demand
Non-earmarked credit for households and businesses
Households Business
0
6
12
18
24
30
1 2 3 4 5 6 7 8 9 10 11 12 13Weeks
2019 2020
R$ billion
0
12
24
36
48
60
1 2 3 4 5 6 7 8 9 10 11 12 13Weeks
2019 2020
R$ billion
Government responses
Decline in import tariffs for medical supplies and raw materials
Hiring of doctors and nurses, and increased supply of hospital beds, respirators,
covid-19 tests
Transfers to retirees, low-income households, informal sector, SMEs
Aid for tourism, airline and other most impacted sectors
Aid for states and municipalities
For details and other measures: www.gov.br (in Portuguese)
19
What´s next?
Uncertainty outlook
Source: BCB/Inflation Report
Human and capital losses
Length of lockdowns
Unwinding of lockdown
Pace of economic recovery
Reversal of fiscal policy measures
Wide range of forecasts
Source: Bloomberg
-3,3
3,6
2,3
-2,5
1,5 0,9
-5,3
4,5
1,33,0
6,55,5
-15
-10
-5
0
5
10
15
20
20 21 22 20 21 22 20 21 22 20 21 22
USA Japan Euro area China
Main Economies – growth (% yoy)
-1,5
2,02,2
4,8
4,3
6,3
-3,5
1,82,0
-1,5
2,6 2,5
-3,4
2,0
2,5
-0,9
2,7
2,7
0,0
3,23,4
-10
-5
0
5
10
20 21 22 20 21 22 20 21 22 20 21 22 20 21 22 20 21 22 20 21 22
Russia India Mexico Brazil Argentina Chile Colombia
Emerging Economies – growth (% yoy)
*Numbers as of April 13, 2020
22
Thank you!
Fernanda NechioDeputy Governor for International Affairs and Corporate Risk Management
“The Central Bank of Brazil stresses that it will continue to deploy its arsenal of monetary, exchange rate and financial stability policies to fight the current crisis.”
229th Copom MinutesMarch 18, 2019