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Brazil Economic Activity November 2023

Brazil: Economic activity flatlines in November

Economic activity flatlined in month-on-month seasonally adjusted terms in November, which was an improvement from October’s 0.2% decrease but surprised markets on the downside.

On an annual basis, economic activity rose at a quicker rate of 2.2% in November (October: +1.3% yoy), the best result since June. Accordingly, annual average economic activity growth increased to 2.3% in November (October: +2.2%), indicating an improving trend.

Meanwhile, retail sales swung back into a contraction in December from the prior month’s 0.1% increase and posted a 1.3% seasonally adjusted month-on-month decline—the sharpest in a year.

Conversely, industrial output growth accelerated to 1.1% in seasonally adjusted month-on-month terms, up from the previous month’s 0.7% rise. December’s upturn was the strongest in nine months.

Our panelists expect GDP to have contracted quarter on quarter in Q4 overall, as the economy will have continued to feel the pinch of still-high interest rates.

Our panel expects quarter-on-quarter GDP growth to be making a comeback in Q1 2024—the momentum should last through Q4—as the impact of lower interest rates is felt in the real economy. The Central Bank of Brazil began an aggressive monetary policy loosening cycle in August 2023—cuts have amounted to 250 basis points thus far. Nevertheless, overall 2024 GDP growth is seen below that of 2023; adverse effects stemming from the El Niño weather pattern and a high base effect from 2023’s record harvest will restrain growth.

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