Brazil's weak Q114 GDP print helps confirm our view that the economy will continue to see tepid growth in the coming years as the consumption story dims and investment has yet to pick up meaningfully. We have downgraded our headline real GDP growth forecasts for 2014 and 2015 to 1.8% and 2.2% respectively, primarily owing to a weakening outlook for fixed investment.
Weakening investment and private consumption growth in Brazil's Q114 GDP release highlight the continued challenges facing the economy, and inform our view that slow growth is here to stay for several years. We have downgraded our 2014 and 2015 headline real GDP growth forecasts to 1.8% and 2.2% respectively, from 2.0% and 2.4%. This implies that growth will remain broadly in line with the headline print for Q114, which came in at 1.9% year-on-year (y-o-y), in the next few quarters.
Growth forecasts for Brazil's shipping industry are set to be impressive for 2014. In box throughput terms at the Port of Santos, we anticipate y-o-y gains of almost double figures (9.50%), while the tonnage picture is similar with annual growth of 9.00%. The port of Itajaí is poised to perform even better, with tonnage throughput of 13.00% pencilled in for 2014 and box throughput of a slightly lower 9.00%.
Key Industry Forecasts
Total tonnage throughput at the Port of Santos to grow 9.00% in 2014 to reach 124.35mn tonnes.
Container throughput at Santos to grow 9.50% to reach 3.78mn twenty-foot equivalent units (TEUs) in 2014.
Total tonnage throughput at the Port of Itajaí to increase 13.00% in 2014 to reach 14.25mn tonnes.
Container throughput at the port of Itajaí to grow 9.00% to reach 1.20mn TEUs in 2014.
Key Industry Trends
Robust Medium-Term Growth At Santos: The port of Santos in Brazil is forecast to see robust growth in both total tonnage and box throughput this year - an expansion in volumes BMI believes will continue to play out over our medium-term throughput forecast to 2018. Downside risks...