In Brazil, growth data for 1Q16 and the monthly indicators of the past two months have only confirmed the negative expectation for the economic growth of the country in 2016, which sees a contraction of 3.4% y-o-y in GDP. For 2017, however, the same figure for 1Q16 GDP growth might suggest the deceleration has almost reached its lowest point and that cyclical recovery could follow. That said, GDP is forecast to post growth of around 0.4% y-o-y in 2017.
In Russia, encouraging signals in the past five months have supported the perception of slower deceleration in GDP this year compared to 2015. It actually prompted a marginal upward revision for 2016 to 1.0% contraction, from 1.1%. For 2017, reduced inflationary pressures together with marginal improvements in commodity prices would lend badly needed support to domestic demand and export revenues. GDP is forecast to expand by 0.7% y-o-y in 2017.
The Indian economy in the second half of 2016 seems like it will be supported by the country’s high savings rate, fast labour force growth and rapidly expanding middle class. Some of the government's reform initiatives are expected to also boost investment. India’s current account deficit continues to run at a very modest level. The Reserve Bank of India (RBI) decided to maintain its accommodative policy stance during the first week of June 2016. But May's inflation figures are likely to be followed by equally high readings in June, which are likely to result in an increasingly hawkish tone from the RBI. In terms of India’s tax policy, the government, led by the ruling Bharatiya Janata Party (BJP), published a draft version of its goods and services tax legislation on 14 June in order to seek public opinion regarding the key tax reform proposal. The GDP growth expectation for 2016 remains unchanged at 7.5% and the expectation for 2017 stands at 7.2%.
The Chinese government’s expenditure growth quadrupled in May. Increased spending on education, community affairs, healthcare and social security were the largest contributors to this. China's stimulus shifted into low-gear in the 2Q16, creating room for additional support later in 2016. It seems China’s new economy is balancing out the traditional heavy industry slowdown over the past few quarters. China's industrial profit growth continued to soften in May and its pace was much slower compared to April. The People's Bank of China (PBoC) stated that downwards pressure on the economy remained relatively large but said it was "hopeful" growth could remain within a reasonable range. Reasonable growth implies at or above the 6.5% real growth minimum set for 2016-20. China’s GDP growth expectation in 2016 was kept unchanged this month at 6.5%. The GDP growth expectation for 2017 is 6.1%.