IBRE estimates that Brazil will not enter into recession, but growth is slow

The Composite Leading Economic Index (CLEI) for Brazil, published by the Brazilian Institute of Economics (FGV/IBRE) and by The Conference Board, advanced 1.1% in January, reaching the mark of 125.0 points (2004=100). The result followed a 0.4% increase in December and a 0.4% decrease in November. Six of the eight components contributed positively to the index in January.The Composite Leading Economic Index aggregates eight economic components that measure economic activity in Brazil and each of them individually has proved efficient in anticipating economic trends. We are not entering into recession, but we are not entering a phase of strong and sustainable growth either, said IBREs economist, Paulo Picchetti, in an interview to the newspaper O Estado de São Paulo.According to Pichetti, although the CLEI showed a 1.1% decrease in January 2014 compared to December 2013, the bi-annual analysis - comparing January through July last year - showed a 0.30% increase, the first positive result in nine months, in this basis of comparison. However, the Composite Coincident Economic Indicator (CCEI), which measures the current conditions and increased 0.4% in January, supports the analysis that, although there is no imminent risk of recession, the activity is growing at a weak pace. The change of the previous months was also close to zero, indicating that the country is in a low growth cycle, approaching stability, he explained.The researcher called attention to the behavior of the items that make up the CLEI. In January, six of the eight components contributed negatively to the index: the performance of Bovespa, Industry Survey, Services Survey, Consumer Survey, interest rates and changes in terms of trade. This shows that there is an atmosphere of little optimism and it is noteworthy because it is linked with the quantitative growth forecasts that have being downgraded, he said. The only components that positively contributed were the production of consumer durable goods and volume of exports.About the CLEIAccording to IBRE, by adding individual indicators into a composite index such as the CLEI, the so-called noises are filtered, helping to reveal the actual economic trend. With a historical series since 1996, the CLEI reliably anticipated all four recessions identified by IBRE's Committee of Economic Cycles Dating (CODACE) during this period.The Composite Leading Economic Index (CLEI)TM for Brazil was launched in July 2013 and allows a direct comparison among economic cycles in Brazil and those of 11 other countries and regions already covered by The Conference Board: China, the United States, the Euro Zone, Australia, France, Germany, Japan, Mexico, Korea, Spain and the United Kingdom.