Leading Economic Index for Brazil rises in March
The Leading Economic Index for Brazil (LEI), released by FGV’s Brazilian Institute of Economics (IBRE) and The Conference Board (TCB), rose 0.3% between February and March, totaling 117.6 points. Seven of the eight component series contributed to the increase in the indicator, particularly Swap 360 (reversed), which rose 5.5%.
The Brazilian Coincident Economic Index (CEI, FGV TCB), which measures current economic conditions, varied -0.1% in the same period.
“The unfavorable CEI result in March is a reflection of weaker economic indicators”, said Paulo Picchetti, IBRE researcher. “However, the LEI’s increase leads us to conclude that a turnaround in the current expansion cycle is still unlikely”, he said.
The LEI comprises eight economic components to gauge Brazil’s economic activity. Each of them has been individually proven to effectively anticipate economic trends. The incorporation of individual indicators into a compound index filters the so-called “noise”, in order to effectively reveal actual economic trends.
The eight components of the LEI are: Prefixed DI swap reference interest rate – 360 days (Source: Central Bank of Brazil); Ibovespa (Source: BOVESPA - São Paulo Stock Exchange); Industry Expectations Index (Source: FGV IBRE); Service Expectations Index (Source: FGV IBRE); Consumer Expectations Index (Source: FGV IBRE); Durable consumer goods physical production index (Source: IBGE); Trade Terms Index (Source: FUNCEX - Foreign Trade Studies Center Foundation); and Exports quantum index (Source: FUNCEX - Foreign Trade Studies Center Foundation).