Brazil’s economy is expected to have grown by 0.5% in Q4 2022, a slowdown from 0.9% in Q3 due to reduced private consumption and investment. Future projections indicate stronger annual growth, with an increase to 3.4% forecasted for 2024. However, government forecasts for 2025 growth have been lowered to 2.3%.
Brazil’s economic growth is projected to have slowed in the last quarter of the previous year due to decreased private consumption and investment. According to a Reuters poll conducted from February 26 to March 3, the economy is expected to have expanded by 0.5% from the previous quarter, with an annual growth rate estimated at 4.1%. This indicates a decline from the 0.9% growth observed in the third quarter.
Analysts at J.P. Morgan noted that the slowdown was primarily due to reduced private consumption and a decrease in investment, which marked the first decline in over a year. Despite these challenges, solid government spending, a slight positive impact from net exports, and inventories are anticipated to contribute to a positive growth rate at the end of the year. However, there are growing fiscal concerns linked to Brazil’s dependence on federal spending, leading to increased market sell-offs.
Further complicating the economic situation, foreign direct investment was less than the current account deficit last year, constraining growth. LCA 4intelligence economist Bruno Imazumi forecasts quarterly rises in various sectors, predicting a 0.4% growth in services, a minimal 0.1% in industry, and a substantial 1.8% in agriculture. He highlighted strong performance in financial intermediation and related services within the broader services sector.
The upcoming GDP data, expected on Friday, is projected to confirm that Brazil’s growth for 2024 significantly exceeds earlier estimates. Throughout the year, analysts have raised their predictions based on a robust job market and increased social spending, which countered the impacts of high-interest rates. In January, the median forecast for 2024 growth was increased to 3.4%, compared to an initial prediction of 1.6% at the start of last year.
Nevertheless, Brazil’s government recently revised its 2025 growth forecast down to 2.3%, continuing its monetary tightening efforts. Despite the economic challenges, a senior official affirmed that there would not be any extraordinary measures taken to stimulate growth, emphasizing a commitment to maintaining Brazil’s fiscal framework.
In conclusion, Brazil’s economic growth is predicted to have decelerated in the final quarter of last year, with a growth forecast of 0.5%. Factors contributing to this slowdown include decreased private consumption and investment, although government spending and exports provide some positive momentum. Despite concerns regarding fiscal sustainability, future predictions for economic growth remain optimistic, with improvements expected in job creation and social spending. The government intends to uphold fiscal discipline while managing economic challenges.
Original Source: money.usnews.com
