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Inflation Collapses as Brazil and Russia Emerge from Recession

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The return of economic growth in Brazil and Russia is providing an important boost to global GDP and has been accompanied by a pick-up in real wage growth, retail sales and industrial production, according to the latest 20/20 Vision chart pack from Fitch Ratings.

The improving activity picture has been accompanied by rapid disinflation in the aftermath of two years of recession and a recent strengthening in exchange rates.

“Recent inflation outturns of around 4% in Brazil and Russia are very low by historical standards and are opening up space for further monetary easing in both countries,” said Brian Coulton, Chief Economist at Fitch.

With nominal wage growth steady, real wage growth is rising, helping to support a nascent recovery in consumer spending in Russia and a stabilisation in Brazil. On the basis of recent industrial production, credit growth and labour market trends, Russia’s 2017 recovery looks to be on a firmer footing than that in Brazil.

Fitch’s bi-monthly 20/20 Vision chart pack covers 20 major economies and 20 economic variables that are the focus of Fitch’s economics team’s global macro analysis and plots five years of high frequency economic data with consistent coverage across each country.