The city on the beach in Brazil

Brazil GDP Q4 2022

Brazil: Economy records sharpest contraction since Q2 2021 in Q4 2022

The Brazilian economy ended 2022 on a sour note. The cumulative 1,175 basis points in Central Bank hikes from March 2021 to August 2022 succeeded in cooling the economy: GDP contracted 0.2% on a seasonally adjusted quarter-on-quarter basis in the final quarter of the year, contrasting the 0.3% expansion tallied in the third quarter. Q4’s reading marked the worst result since Q2 2021 and was largely priced in by markets.

The quarterly downturn was broad-based, with private and public spending, fixed investment and exports all weakening. Domestically, fixed investment contracted 1.1% in Q4 (Q3: +2.6% s.a. qoq). Meanwhile, private consumption growth waned to 0.3% in Q4 (Q3: +1.0% s.a. qoq). A lower unemployment rate in the period (Q4: 8.1%; Q3: 8.9%), together with moderating price pressures in Q4, likely prevented a larger spending deceleration. Additionally, public consumption growth moderated to 0.3% in Q4 (Q3: +1.2% s.a. qoq).

Turning to the external sector, exports of goods and services increased 3.5% on a seasonally adjusted quarterly basis in the fourth quarter, which was below the third quarter’s 3.7% expansion. Meanwhile, imports of goods and services contracted 1.9% in Q4 (Q3: +5.5% s.a. qoq). Consequently, the external sector contributed 0.8 percentage points to overall growth, an improvement from the prior quarter’s neither contribution nor detraction.

On an annual basis, economic growth cooled to 1.9% in Q4 from the previous quarter’s 3.6% expansion. Q4’s reading marked the slowest growth since Q1 2021 and surprised markets on the downside; a 2.2% expansion had been expected. The figure brought overall annual growth for 2022 to 2.9%, nearly halving from 2021’s 5.0% post-pandemic rebound.

Reflecting on the growth outlook for 2023, analysts at the EIU said:

“We recognise upside and downside risks. Higher social spending, debt relief for poor households and an 8.9% minimum-wage rise will put a floor under private consumption and overall GDP growth amid still-high interest rates, elevated inflation and a softening labour market. Nevertheless, there is a risk that these stimulatory factors delay the start of monetary easing until later in the year, weighing on investment.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest