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Brazil Economic Activity January 2024

Brazil: Economic activity growth eases in January

The Brazilian economy kicked off 2024 on softer footing: Economic activity grew 0.6% in seasonally adjusted month-on-month terms in January, which was a deterioration from December’s 0.8% increase. January’s print still overshot market expectations.

On an annual basis, economic activity rose at a quicker rate of 3.4% in January (December: +1.3% yoy), the best result since April 2023. That said, the trend was unchanged, with annual average economic activity growth coming in at December’s 2.5% in January.

Meanwhile, retail sales growth ebbed to 1.0% in seasonally adjusted month-on-month terms in February, slowing from January’s 2.8% increase.

In the same month, industrial output fell at a slower pace of 0.3% (January: -1.5% s.a. mom).

Going forward, the Central Bank’s interest rate cuts are set to trickle down to the real economy, providing some support to investment and, in turn, economic growth. That said, inflation will remain above the midpoint of the Central Bank’s 1.5–4.5% tolerance band during the rest of this year, partly offsetting the positive effect of looser monetary policy on private spending and capping the overall improvement of household consumption.

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