Brazil Quarterly Update – February 2020
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Economic activity remained weak for most of 2019, but we expect growth to accelerate this year on the back of expansionary monetary policy; downside risks include stalling reforms, weak exports and trade tensions. Insurance premium growth continues to improve, in particular life lines.
- Brazil's economic activity exceeded expectations in 3Q19, growing by 1.2% yoy, prompting us to estimate year-end growth at 1.2%.
- We expect the economy to increase above 2% in 2020, supported by accommodative monetary policy and expanding private credit.
- Risks to the outlook include challenging internal conditions such as still high unemployment and stalling reforms, weaker external demand due to slower global growth and Argentina's recession, and trade tensions ahead of the US elections.
- We forecast inflation to remain under control and interest rates unchanged for the rest of the year.
- Total insurance premium (excluding health) increased by 7.4% in real terms in 9M19, on the back of solid growth of both traditional life and savings-related products.
- P&C premiums fell by 2% dragged by negative growth in motor business, offsetting increases in specialty and property lines.
- Ceded premiums increased by 7.9% in 9M19, and the overall cession rate stayed at 4.9%.