By Gabriel Burin
BUENOS AIRES (Reuters) – Brazil’s economy kept growing at a solid pace last quarter as compared with the first three months of the yr, supported by household expenditure, a Reuters poll predicted.
But higher imports of services and products likely weighed on the country’s growth after surpassing less-dynamic exports at first of 2024 resulting from a strong foreign exchange rate, which has depreciated recently.
Second-quarter gross domestic product figures, scheduled for Tuesday, are forecast to indicate a 0.9% expansion versus the January-March period, when the economy advanced 0.8%, consistent with the median forecast of 18 analysts polled Aug. 28-Sept. 2.
“We estimate the Brazilian economy grew 0.9% on the quarter, 2.7% yearly… likely supported by resilient private consumption benefiting partially from strong labor markets and rising real wages,” Barclays economists wrote in a report.
While public spending contributed with an increase in social profit payments, along with aid related to floods in April and May, “on the downside, the external sector was likely a drag for growth resulting from higher imports,” they added.
In a report, Santander analysts saw a 7.8% quarterly rise in imports versus a much lower 1.3% gain in exports. In the first quarter, imports and exports grew 6.5% and 0.2% respectively, as Brazilians piled into foreign goods and services.
Meanwhile, from the point of view of supply, total industrial production, including mining, will need to have expanded by 1.2%, an advance partly offset by a 2.4% contraction throughout the smaller farm sector, consistent with Santander.
On an annual basis, economic growth was seen throughout the survey at 2.7% throughout the second quarter, the easiest since 3.5% within the similar period of 2023, following the inauguration of President Luiz Inacio Lula da Silva firstly of last yr.
“Brazil’s growth is very surprising as this economy could grow near 3% for the second consecutive yr, a median rate that outperforms the alternative countries of the region in 2023 and 2024,” J.P. Morgan economists wrote in a report.
“We expect this strength could be prolonged through the third quarter but foresee some deceleration going forward as, for the first time shortly, each monetary and monetary policies could be restrictive for growth.”
Last week, Lula signalled he would accept a possible rate hike from his central bank chief nominee for 2025-2028. On the similar time, the finance ministry vowed to satisfy its promise of fiscal restraint by year-end.
(Reporting and polling by Gabriel Burin; Editing by Ross Finley and Christina Fincher)