Brazil's growth deceleration closely tracks deteriorating terms of trade

Brazil's growth trajectory and the BRL trend through cycles are closely linked to the terms of trade. Since peaking in mid-2011, Brazil's terms of trade has been on a downturn, as sharply falling export prices have outweighed the smaller decline in import prices. 

Low commodity prices are expected to keep export prices under pressure. Unless import prices fall further, the terms of trade is unlikely to improve, holding down both growth and the BRL for an extended period. 

"Given the high share of manufactured items in Brazil's imports, a lot will depend on how prices of manufacturing goods behave globally. Unfortunately, Brazil will have little control over these developments. As a result, reviving the economy remains an uphill task." says Societe Generale