Brazil: GDP contracts in Q1
May 29, 2015
In the first quarter, GDP fell 0.2% over the previous quarter in seasonally-adjusted terms (Q4: +0.3% quarter-on-quarter). The result marked a return to contraction after two consecutive quarters of growth, but beat the 0.5% decrease that market analysts had expected.
Q1’s deterioration was driven by slumping domestic demand, while the external sector improved compared to last quarter. Private consumption swung from a 1.1% expansion in Q4 to a 1.5% contraction in Q1, which marked the worst result since Q4 2008. In addition, fixed investment deteriorated to a 1.3% contraction (Q4: -0.6 qoq) and government consumption also fell 1.3% (Q4: -0.9% qoq).
On the external side of the economy, exports of goods and services improved, swinging from a 4.4% contraction in Q4 to a 5.7% expansion in Q1. Imports also strengthened, rising 1.2% over the previous quarter, contrasting the 4.9% fall recorded in the previous period. As a result, the external sector improved significantly from a plus 1.3 percentage point contribution in Q4 to a plus 6.7 percentage point contribution in Q1.
On an annual basis, the economy contracted 1.6% in Q1 compared to the same quarter of the previous year, which was a significant deterioration from the 0.2% decrease tallied in Q4. In addition, the result marked the largest contraction since Q2 2009.