Brazil: Economic growth picks up, beats expectations in Q2
August 31, 2013
In the second quarter, GDP increased 1.5% over the previous quarter in seasonally-adjusted terms, representing the highest growth rate in 13 quarters. The increase was above the 0.6% growth registered in the first quarter and exceeded market expectations of a 0.9% rise. The economy added 3.3% in Q2 compared to the same quarter last year, which was up from the 1.9% increase tallied in Q1.
On the domestic side, private consumption added a meager 0.3% over the previous quarter (Q1: 0.0% quarter-on-quarter) and government consumption grew only 0.5% in the second quarter (Q1: 0.0% qoq). Fixed investment decelerated from a 4.7% expansion in the first quarter to a 3.6% rise in the second.
On the external side of the economy, exports of goods and services rebounded dramatically from a contraction of 6.9% Q1 to a 6.9% expansion in Q2. Imports grew just 0.6%, which was significantly below the 5.7% expansion recorded in the last quarter.
The Central Bank expects GDP to grow 2.7% in 2013, according to its Inflation Report from June. In August, the Brazilian Finance Minister reduced the 2013 growth target from 3.0% to 2.5%, and the 2014 target from 4.5% to 4%. LatinFocus Consensus Forecast panellists expect the economy to expand 2.3% in 2013, which is down 0.2 percentage points from last month's estimate. For 2014, the panel sees GDP growth accelerating to 2.7%.
Author: Carl Kelly, Economist