Brazil GDP


Brazil: GDP expands in Q3, Brazil exits technical recession

November 30, 2014

In the third quarter, GDP rose 0.1% over the previous quarter in seasonally-adjusted terms (Q2: -0.6% quarter-on-quarter), which marked the first expansion in three quarters and was below the 0.2% increase that market had expected. As a result, Brazil has now exited the technical recession it had entered in the first half of the year.

The Q3 expansion resulted from an improvement in domestic demand. Fixed investment swung from a 5.2% contraction in Q2 to a 1.3% expansion in Q3. In addition, government consumption rose 1.3% in Q3 which contrasted Q2’s 0.5% decrease. Conversely, private consumption fell 0.3% over the previous quarter, which was a deterioration from the flat growth recorded in Q2.

On the external side of the economy, exports of goods and services expanded 1.0% in Q3, which was below the 3.0% rise tallied in Q2. Imports rose 2.4% over the previous quarter, which contrasted the 1.8% decrease recorded in the previous period. As a result, the external sector swung from a plus 8.2 percentage point contribution in Q2 to a minus 2.6 percentage point contribution in Q3.

On an annual basis, the economy contracted 0.2% in Q3 compared to the same quarter last year, which was an improvement from the 0.9% decrease tallied in Q2.

The Central Bank expects GDP to grow 0.7% in 2014 and accelerate to a 1.2% expansion in 2015. LatinFocus Consensus Forecast panelists expect the economy to expand 0.3% in 2014, which is unchanged from last month’s estimate. For 2015, the panel sees GDP growth at 1.1%, which is also unchanged from the previous month’s estimate.

Author: Angela Bouzanis, Senior Economist

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