Brazil: Economy gains momentum in the first quarter
June 3, 2011
In the first quarter, GDP expanded a seasonally adjusted 1.3% over the previous quarter, which was above the revised 0.8% increase in the fourth quarter (previously reported: +0.7% quarter-on-quarter) but was in line with market expectations. Compared to the same quarter last year, the economy added 4.2% (Q4: +5.0% year-on-year). The acceleration over the previous quarter reflected strong fixed investment and higher government spending. Fixed investment grew 1.2% in the first quarter (Q4: +0.4% qoq) and government consumption rebounded from a 0.3% contraction in the last quarter of 2010 to a 0.8% expansion in the first quarter. On the other hand, private consumption decelerated from 2.3% in Q4 to 0.6% in Q1. The net contribution from the external sector to overall growth deteriorated, as the decline in exports was more severe than the drop in imports. While exports of goods and services decreased 3.2% in Q1 (Q4: +3.3% qoq), imports declined only 1.6% (Q4: +1.5% qoq). The Central Bank expects GDP to grow 4.5% in 2011.