In February, Brazil’s trend pace of industrial output contraction rebounded, declining 9.8% as compared with January’s fall of 13.6%, in spite of a sharp drop on seasonally adjusted and sequential basis. Also, the country posted positive data for exports on a year-on-year basis and the strongest since July 2014. Therefore, the pace of overall economic contraction is expected to have improved to -5.7% y/y in February from -8.1% y/y in January, according to Societe Generale.

The seasonally adjusted index is expected to have risen by 1.4% on a monthly basis. However, the data still presents certain risks on the downside to the first quarter projection of -1.4% q/q, noted Societe Generale. Meanwhile, on the demand side, the consumption growth seems worse than expectations, further adding to the downside risk to the Q1 growth forecast and the whole of 2016  growth forecast of -4.3%.

“Overall, while the February growth number looks better than the January print, the economy looks set to worsen in 2016”, added Societe Generale.