Deterioration in the Brazil's TOT affects long-term growth trajectory

The long-term trajectory of growth trend is affected profoundly by changes in the TOT. With commodity prices expected to stay low, export prices and the TOT could remain under pressure unless import prices fall further. This could keep growth low for an extended period.

Conversely, if import prices were to fall faster, this could lead to gains on the TOT and improve growth.

Given the high share of manufactured items in Brazil's imports, a lot will depend on how the prices of tradable manufacturing goods behave globally. 

In any case, Brazil will have little control over these developments, at least in the near term. Consequently, reviving the economy remains an uphill task, says Societe Generale.