Consumers are set to face significant headwinds in the coming year as job losses increase, feeding through to rising defaults, which will limit lending to households, falling real wages and still-high import costs. Private consumption has managed to hold up thus far in ----, as the government has continued its large subsidy programmes that have buoyed wages at a time of increasing lay-offs. ...Private consumption has managed to hold up thus far in ----, as the government has continued its large subsidy programmes that have buoyed wages at a time of increasing lay-offs. Rigid labour market dynamics, such as policies that have led to extremely strong labour unions, have forestalled significant job losses in ----, with the unemployment rate only beginning to rise over the past few months. This has also limited declines in private spending as household spend- ing power has broadly been maintained, even in the face of a significant currency depreciation, which has raised import costs. ...We believe that in ----, the president will successfully pass new measures to address these concerns. However, this will worsen the headwinds facing the country s population, most notably the large portion of its citizenry that entered the middle class over the past decade.
...Brazil s real GDP is set to face significant near-term headwinds given the structural challenges facing the economy as the decade-long commodity price boom comes to an end as Chi- nese demand fades. Though the economy will slowly return to expansion, it will not experience the same levels of growth seen in the ----s as a poor operational environment limits foreign capital flows into the economy. ...Though the economy will slowly return to expansion, it will not experience the same levels of growth seen in the ----s as a poor operational environment limits foreign capital flows into the economy. Household spending is set to face significant challenges in the coming years as investment into the economy will be focused on lower value add services, compared with high-wage jobs needed to boost real consump- tion in the Brazilian economy. Private Consumption: Brazilian households are set to become a smaller portion of the country s GDP composition in the coming years after significant declines in ---- and ---- and only mod- est recoveries thereafter. ...Nearly -- of the country s spending is dictated by the Brazilian constitution and limits the government s ability to enact fiscal consolidation. Indeed, even with austerity measures set to be enacted in ---- and ----, we believe that government consumption will remain close to -- of GDP. -- Business Monitor International Ltd www.bmiresearch.com
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