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The Brazil Risk Dashboard features the Brazil Risk monthly score and tracks a select set of five indicators that reveal trends in overall country risk on a monthly basis. The variable set includes the Misery Index, the formal employment index, the Central Bank’s Index of Economic Activity (IBC-Br), the monthly homicide rate, and presidential approval.

Measuring a Brazil’s risk for decision makers and investors can be a tricky. Investment analysts can factor in dozens of economic, fiscal and political variables to numerically score country risk. Inflation, interest rate hikes, or presidential approval can frame decision making over investments, negotiations, and partnership prospecting. Of course, reality and expectations intersect to shape the evolution of country risk.

BrazilWorks provides a monthly Brazil Risk score to track overall economic and political stability, especially in light of the incoming Bolsonaro government and the dense reform agenda. The Brazil Risk is composed of five key variables that taken together provide a framework for understanding the evolution of risk and forecasting the direction of economic and political development.


Each of the five monthly indicators is scored on a discrete scale: 0 for poor performance, 1 for stable performance, and 2 for improved performance. The scores are totaled for a measure on a scale of 0 to 10 with the former representing the absence of economic and political stability (higher country risk) and the latter representing economic expansion and stability (lower country risk).

The presidential approval is scored as 0 for approval between 0 and 40%, 1 for 41 to 60%, and 2 for approval exceeding 61%. For example, in November of 2018 then president Michel Temer’s approval (excellent or good) was 4% and therefore scored 0.

Risk Scale

Low - 8-10

Moderate - 5-7

High - 3-4

Very High - 0-2

March 2019 Brazil Risk.png

The March 2019 Brazil Risk Score Is 6 and Represents Moderate Country Risk

·       Misery Index/Stable Performance

·       Formal Employment Index/Improved Performance

·       Economic Activity Index/Stable Performance

·       Homicide Rate/Stable Performance

·       Presidential Approval/Stable Performance

The March 2019 Brazil Risk Score of 6 represents improvement from the February score, largely because of the stability of the measures and the notable increase in the formal employment index (for February). The Economic Activity Index reports the January measure and the Homicide measure remains the December 2018 calculation. Globo’s Monitor da Violência has not been updated from its last December 2018 measure, but state by state reports show an uneven pattern of improved performance in some states, such as Mato Grosso do Sul and Pernambuco but poor performance is Rio de Janeiro. For now we are scoring the homicide rate as stable, 1.8 per 100,000 until more accurate data is made public. Last, the presidential approval rating is largely unchanged when reporting the Excellent and Regular measures taken together. For now we score approval as stable but the tendency is falling Excellent ratings and increases in the Poor rating portion.

The high score of 6 returns out performs the average since July and represents a significant increase over February-based on the stability of the measures and notable increase in formal employment during February. The series mean average since July 2018 is 4.89.

Monthly Brazil Risk


Misery Index

Misery Index

The misery index is an economic indicator, created by economist Arthur Okun. The index helps determine how the average citizen is doing economically and it is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate. The unemployment measure is taken from Instituto Brasileiro de Geografia e Estatistica (IBGE) and is calculated as the percent of the economically active population that is unemployed. We use the inflation IPCA indicator as measured by the Instituto Brasileiro de Geografia e Estatistica. IPCA is a measure of price movements by the comparison between the retail prices from consumption of families with a purchasing power of up to forty minimum wages. The purchase power of the BRL is dragged down by inflation. The IPCA is a key indicator to measure inflation and changes in purchasing trends. It is assumed that both a higher rate of unemployment and a worsening of inflation create economic and social costs for a country. Brazil’s misery index has declined since June 2018, pushed by historically low levels of inflation but coupled to above average unemployment levels.

Formal Employment Index

Formal Employment Index

The Brazilian Central Bank tracks formal employment with data from the Ministry of Labor and scores an index based on December 2001 = 100. In Brazil, formal employment is defined as employment relationships that result when an employer signs the Carteira de Trabalho of an employee. The signed Carteira de Trabalho activates the registration of the employment for the purposes of recognized labor and employment rights, including the minimum wage, paid vacation, FGTS employment benefits guarantee fund, 40 hour work week, and unemployment and disability insurance. For more information on formal employment in Brazil read Michele Romanello and Flávio de Oliveira-Gonçalves, “The Transition of Brazilian Workers to Formality: evidence from duration anlaysis.” Brazil’s economic recovery is still fragile and shallow, but formal employment has made modest gains in the past six months.

Economic Activity Index

Central Bank’s Economic Activity Index

The Index of Economic Activity of the Central Bank (IBC-Br) can be understood as a preview of the gross domestic product (GDP). The index is a composite score of the monthly evolution of a set of proxy variables measuring agricultural, industrial and service sector production as well as sales taxes. The index is formulated to inform the formation of monetary policy. The index shows very modest production expansion and reflects the fragile economic recovery now underway.

Monthly Homicides Per 100,000

The Homicide Rate

The Homicides Per 100,000 habitants is a ratio measure of the calculated number of homicides per 100,000 each month. The measure is reported by Monitor da Violência and published by Globo (G1) in cooperation with the Núcleo de Estudos da Violência da USP e o Fórum Brasileiro de Segurança Pública. The rate is a monthly measure of violent, intentional deaths. Brazil’s homicide rate, violence and criminality became a major issue in the 2018 elections and rank high on the list of concerns and policy priorities voiced by representative samples of Brazilians. The homicide rate serves as a general proxy variable for the broader level of public security. Brazil’s annual homicide rate exceeds 30 per 100,000, placing it among the top twenty countries in the world. In 2018 the monthly average homicide rate was 1.9 per 100,000. There are modest decreases from last year’s monthly average measured for January and February of 2019.

Presidential Approval

Presidential Approval

The presidential approval rate measures the proportion of respondents in a representative sample claiming that the president’s performance is excellent or good. The chart above includes the performance of former President Michel Temer (2018), the candidacy of Jair Bolsonaro up to November of 2018, Bolsonaro’s transition performance in December of 2018, and his presidential approval thereafter. In this graph the December 2018 measures the approval for the transition team of incoming President Jair Bolsonaro (PSL) as observed by the CNI poll in mid-December of 2018. The January, February and March 2019 ratings come from IBOPE and represent the addition of the Excellent/Good and Regular measures. The rate serves as a proxy variable for a broader understanding of political performance and stability in Brazil. President Bolsonaro’s rate of excellent and regular approval remains high and above 65% but his excellent score is dropping while his measures of poor approval are rising measurably.