Brazil: GDP grows at softest pace since Q2 2021 in Q3
December 1, 2022
Underlying momentum strengthened at a softer pace in the third quarter of 2022, with GDP growth waning to 0.4% on a seasonally adjusted quarter-on-quarter basis, from 1.0% in the second quarter. Q3’s reading marked the weakest print since Q2 2021 and surprised analysts on the downside; they had penciled in a 0.6% expansion. Meanwhile, on an annual basis, economic growth moderated to 3.6% in Q3, from the previous period’s 3.7% growth.
Domestically, the quarterly moderation was spearheaded by weaker private consumption and investment growth. Household spending increased a quarterly 1.0% in seasonally adjusted terms in the third quarter, which was below the second quarter’s 2.1% expansion. The lower unemployment rate (Q3: 8.9%; Q2: 9.9%) and average inflation easing to 8.6% in Q3 (Q2: 11.9%) likely supported households’ budgets and prevented a sharper deceleration in spending. Additionally, fixed investment growth moderated to 2.8% in Q3, from 3.8% in the prior quarter. More positively, public consumption rebounded, growing 1.3% in Q3 (Q2: -0.9% s.a. qoq).
Turning to the external sector, exports of goods and services rebounded, growing 3.6% in Q3 (Q2: -2.8% s.a. qoq). Conversely, imports of goods and services growth slowed to 5.8% in Q3 (Q2: +8.7% s.a. qoq). Consequently, the external sector neither contributed nor detracted from overall growth, an improvement from the prior quarter’s 0.4 percentage point detraction.
Author: Marta Casanovas, Economist