Brazil’s Economic Growth Forecast Shows Signs of Slowdown in Q4

Brazil’s economy is expected to have slowed in the last quarter of 2022, growing by 0.5%, down from 0.9% in Q3. Main factors include decreased private consumption and investment, though positive contributions from government spending and inventories help maintain growth. The outlook for growth in 2024 has been upgraded to 3.4%, with a cautious approach to future fiscal measures.

The economic outlook for Brazil indicates a slowdown in growth for the final quarter of last year. According to a Reuters poll involving 21 economists, the country’s economy is expected to have expanded by 0.5% from October to December 2022, down from 0.9% in the previous quarter. The annual growth rate is estimated at 4.1%, reflecting a deceleration driven primarily by a decrease in private consumption and investment.

Analysts from J.P. Morgan noted that while government consumption remained strong, reduced private consumption and the first investment decline in over a year contributed to this slowdown in economic growth. Positive contributions from net exports and inventories helped maintain a growth rate, despite fiscal concerns arising from Brazil’s reliance on federal spending.

Furthermore, LCA 4intelligence economist Bruno Imazumi projected modest growth in various sectors, forecasting a 0.4% increase in services, 0.1% in industry, and a notable 1.8% in agriculture. Notably, the financial intermediation and related services sectors within services are expected to perform well.

Looking ahead, GDP data expected to be released on Friday is anticipated to confirm that Brazil’s economic growth for the end of 2024 exceeds earlier market expectations. Analysts have adjusted their forecasts, anticipating an annual growth rate of 3.4% for 2024, a significant increase from the 1.6% projected at the beginning of the previous year.

In a recent revision, Brazil’s government reduced its growth forecast for 2025 to 2.3% in light of ongoing monetary tightening by the central bank. Despite these adjustments, a senior official reaffirmed that no extraordinary measures would be implemented to spur growth, emphasizing the administration’s commitment to adhering to the established fiscal framework.

In conclusion, Brazil’s economic growth is projected to have slowed in the last quarter of 2022, influenced mainly by decreased private consumption and investment. While government spending continues to support the economy, concerns about fiscal sustainability persist. Nevertheless, analysts foresee a promising growth trajectory for 2024, indicating a potential improvement compared to earlier estimates, despite the government’s cautious approach to fiscal policies and monetary tightening.

Original Source: money.usnews.com