Brazil GDP

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Brazil: GDP contracts in Q1

May 29, 2015

In the first quarter, GDP fell 0.2% over the previous quarter in seasonally-adjusted terms (Q4: +0.3% quarter-on-quarter). The result marked a return to contraction after two consecutive quarters of growth, but beat the 0.5% decrease that market analysts had expected.

Q1’s deterioration was driven by slumping domestic demand, while the external sector improved compared to last quarter. Private consumption swung from a 1.1% expansion in Q4 to a 1.5% contraction in Q1, which marked the worst result since Q4 2008. In addition, fixed investment deteriorated to a 1.3% contraction (Q4: -0.6 qoq) and government consumption also fell 1.3% (Q4: -0.9% qoq).

On the external side of the economy, exports of goods and services improved, swinging from a 4.4% contraction in Q4 to a 5.7% expansion in Q1. Imports also strengthened, rising 1.2% over the previous quarter, contrasting the 4.9% fall recorded in the previous period. As a result, the external sector improved significantly from a plus 1.3 percentage point contribution in Q4 to a plus 6.7 percentage point contribution in Q1.

On an annual basis, the economy contracted 1.6% in Q1 compared to the same quarter of the previous year, which was a significant deterioration from the 0.2% decrease tallied in Q4. In addition, the result marked the largest contraction since Q2 2009.

The Central Bank expects GDP to grow 0.3% in 2015 and accelerate to a 1.5% expansion in 2016. LatinFocus Consensus Forecast panelists expect the economy to contract 0.6% in 2015, which is down 0.5 percentage points from last month’s estimate. For 2016, the panel sees GDP growth at 1.5%.down 0.2 percentage points.


Author: Angela Bouzanis, Lead Economist

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Brazil GDP Chart


Brazil GDP Q1 2015

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %
Source: Brazilian Institute of Statistics and Geography (IBGE) and FocusEconomics Consensus Forecast.


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