Brazil’s economy is expected to grow at a moderated pace of 0.5% in the last quarter of the previous year, reflecting a slowdown from 0.9% in the prior quarter. Key contributing factors include decreased private consumption and investment, while government spending and certain sectors show resilience. Future growth rates are projected to be higher, though fiscal concerns continue to loom.
Brazil’s economy is projected to moderate in the last quarter of the previous year, attributed to slower growth in private consumption and investment, according to a Reuters poll. Economists anticipate a 0.5% growth rate for the October-December period compared to a 0.9% rise in the third quarter. The yearly growth rate is estimated at 4.1%.
Analysts from J.P. Morgan noted that the slowdown was primarily influenced by a decline in private consumption and a drop in investments for the first time in over a year. Despite this, steady government consumption, a minor positive impact from net exports, and inventory contributions are likely to support a positive growth rate.
Brazil’s heavy reliance on federal spending raises fiscal concerns, which have sparked market sell-offs. Additionally, foreign direct investment has not kept pace with the current account deficit, hindering Brazil’s economic growth potential. Earnings projections indicate slight quarterly increases in various sectors, with services expected to rise by 0.4%, industry by 0.1%, and agriculture by 1.8%.
A notable strength is anticipated in the financial intermediation and insurance sectors within services. GDP data expected to be released will likely confirm economic growth exceeding initial market predictions, bolstered by a robust job market and enhanced social spending despite the adverse effects of elevated interest rates.
The latest consensus forecasts project Brazil’s annual growth to reach 3.4% for 2024, significantly up from 1.6% at the start of the previous year. However, the government has revised its 2025 growth forecast down to 2.3% as the central bank continues its monetary tightening. A senior government official reiterated the commitment to the country’s fiscal framework, stating that exceptional measures to stimulate growth would not be implemented.
In conclusion, Brazil’s economy appears to be entering a period of moderated growth, driven by decreased private consumption and investment. Despite these challenges, positive contributions from government spending and specific sectors may provide some stability. Future projections for economic growth remain optimistic, yet fiscal concerns persist as the government maintains a focus on long-term stability rather than immediate interventions.
Original Source: www.marketscreener.com
