Brazil: Economic activity growth eases in February
The economy slightly lost momentum halfway through the first quarter: economic activity increased 0.4% month on month in seasonally adjusted terms in February (January: +0.5% mom). February’s moderation matched market analysts’ expectations and marked the fourth consecutive expansion.
On an annual basis, economic activity rose 2.6% in February, which was below January’s 3.3% expansion. Moreover, the trend pointed down, with the annual average growth of economic activity coming in at 2.3% in February, down from January’s 2.4%.
Services output unexpectedly fell 0.9% in February (January: +0.5% s.a. mom).
Meanwhile, retail sales flatlined in March, slowing from February’s 1.0% month-on-month seasonally adjusted increase. Conversely, in the same month, industrial output rebounded and posted a 1.7% month-on-month seasonally adjusted rise. The reading was an improvement from February’s 0.3% month-on-month decline.
After flatlining for two quarters, GDP should grow sequentially in Q1 2024, before marginally slowing down through Q4 2024. Overall, the economy this year will grow at a milder pace than in 2023. Private consumption growth will continue to cool; inflation will average above the midpoint of the Central Bank of Brazil’s 1.5–4.5% target band, and the monetary policy stance will still be restrictive.