Brazil: Economic growth slows to lowest level in four years
December 3, 2013
In the third quarter, GDP decreased 0.5% over the previous quarter in seasonally-adjusted terms, marking the first contraction and lowest print recorded since Q1 2009. The decrease contrasted the 1.8% growth registered in the second quarter and was greater than the 0.3% fall the market had expected. The decline was driven by deterioration in the external sector and in fixed investment. The economy added 2.2% in Q3 compared to the same quarter last year, which was down from the 3.3% increase tallied in Q2.
On the domestic side, fixed investment tumbled from a 3.6% expansion in the second quarter to a 2.2% contraction in the third. Conversely, private consumption added 1.0% over the previous quarter (Q2: +0.3% quarter-on-quarter) and government consumption grew just 1.2% in the third quarter (Q2: +0.5% qoq).
On the external side of the economy, exports of goods and services plunged from a 6.8% expansion in Q2 to a 1.4% contraction in Q3. Imports fell 0.1%, which was below the 0.3% increase recorded in the previous quarter.
The Central Bank expects GDP to grow 2.5% in 2013, according to its Inflation Report from September. LatinFocus Consensus Forecast panelists expect the economy to expand 2.5% in 2013, which is unchanged from last month's estimate. For 2014, the panel sees GDP growth accelerating to 2.3%, which is also unchanged from last month's forecast.
Author: Carl Kelly, Economist