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Brazil Economic Activity July 2023

Brazil: Economic activity beats expectations in July

The Brazilian economy started the third quarter on a strong footing: Economic activity posted a 0.4% month-on-month seasonally adjusted expansion in July, accelerating from the prior month’s 0.2% increase. The upturn surprised markets on the upside; a Reuters poll had penciled in a 0.3% increase.

On an annual basis, economic activity growth eased to 0.7% in July, down from June’s 2.4% year-on-year increase. Accordingly, the trend pointed down, with annual average growth in economic activity coming in at 3.1% in July, down from June’s 3.5% reading.

Meanwhile, retail sales growth accelerated to a seasonally adjusted 0.7% mom in July from the 0.1% expansion clocked in June. Conversely, industrial output deteriorated in July; it contracted 0.6% mom in seasonally adjusted terms, deteriorating from the prior month’s flat reading.

July’s stronger-than-anticipated result followed resilient second quarter GDP data. This, coupled with higher disposable income amid increased Bolsa Família welfare payments and a cumulative 100 basis points of interest rate cuts by the Central Bank since August, led to the upward revision of our panel’s 2023 GDP growth forecasts over the last month.

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