Brazilian economy likely stagnated in Q4 14

Societe Generale notes..

• The economic activity index suggests that the economy likely stagnated in Q4 14 on a sequential basis (-0.7% yoy) or declined marginally. This implies that it stagnated on a full year basis too.
  
  
• In terms of the demand-side composition of growth, which is key to the near-term outlook, we estimate that while net exports and government spending dragged on growth in Q4, private consumption and investment made a marginal positive contribution. 
  
  
• The economy is likely to contract in 2015 (SG: -0.3%) before recovering modestly to grow by 1.2% in 2016. 
  
  
• The economy's growth potential has declined to below 2% from nearly 3.5% a couple of years back. Between 2011 and 2014, the economy grew by an average of 1.6%.
  
  
• However, it looks set to contract in 2015 and grow very modestly in 2016, implying an average growth rate of 1.2% between 2011 and 2016. This sharp deceleration is in stark contrast with the average growth rate of 4.5% during the period 2004-10.