The Leading Economic Index® for Brazil, released by FGV IBRE in partnership with The Conference Board, decreased 0.8 percent between November and December 2018. After two consecutive monthly increases, the LEI declined to 115.8 (2016=100), with five out of the eight components contributing negatively to the index in December, with the Terms of Trade Index and the Exports Quantum Index making the largest negative contributions.
The Coincident Economic Index (CEI, FGV TCB) for Brazil, which measures current economic conditions, decreased 0.7 percent in December, to 102.7 (2016=100). Three out of the six components contributed to December’s decline.
“The declines in the LEI and CEI in December appear to be temporary noise in the data, which is commonplace during a recovery, rather than a signal of a reversal of the current recovery”, according to Paulo Picchetti at IBRE FGV. “However, expectations regarding the sustainability and strength of economic growth remain tied to the outcomes of the necessary policy reforms”, adds Picchetti.
The Leading Economic Index aggregates eight economic components that measure economic activity in Brazil. Each of them individually has proved efficient in anticipating economic trends. Aggregating individual indicators into a composite index filters the so-called "noise," contributing to the effective economic trend to be revealed.
About the Leading Economic Index (LEI)
FGV IBRE and The Conference Board launched the Leading Economic Index (LEI) for Brazil in July 2013. With a series since 1996, the LEI would have anticipated, reliably, all four recessions identified by the Brazilian Dating Committee of Economic Cycles (CODACE) during this period. This indicator allows Brazil to directly compare its business cycles with 11 other countries and regions already covered by The Conference Board: China, the United States, the Eurozone, Australia, France, Germany, Japan, Mexico, Korea, Spain and the UK.
The eight components of the Brazilian LEI are:
Pre-fixed DI swap reference rate – 1 year (Source: Brazil's Central Bank)
Ibovespa Stock Market Index (Source: BOVESPA - São Paulo Stock Exchange)
Expectations index of the Manufacturing Survey (Source: FGV IBRE)
Expectations index of the Services Survey (Source: FGV IBRE)
Expectations index of the Consumer Survey (Source: FGV IBRE)
Durable consumer goods - physical production index (Source: IBGE)
Terms of trade index (Source: FUNCEX)
Volume of Exports index (Source: FUNCEX)
ABOUT THE CONFERENCE BOARD
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ABOUT FGV IBRE
The Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV IBRE) was founded in 1951 to research, analyze, produce and disseminate macroeconomic statistics and applied studies. Its purpose is to inform and help improve public policies and private activities in the Brazilian economy. FGV IBRE produces price indices, including the General Price Index (IGP), which served as the official inflation index in Brazil for many years. In addition to price indices, FGV IBRE produces tendency surveys and indicators of economic cycles, which are widely used by managers and analysts. www.fgv.br/ibre