Brazil’s economy estimated to have slowed in Q3, but still strong
2024.12.02 09:40
By Gabriel Burin
BUENOS AIRES (Reuters) – Brazil’s economic growth is estimated to have slowed in the third quarter from a solid performance in the previous three-month period, though it probably still kept running at a strong rate, a Reuters poll found.
The industrial sector will likely show a lower increase than in the second quarter, when a sizzling 1.8% expansion in manufacturing, construction and utilities beat analyst expectations.
Overall, economic growth probably logged a 0.9% rate on the quarter from a torrid 1.4% in April-June, according to the median estimate of 17 economists polled Nov. 27-29. The yearly rate was forecast at 4.0%. Official data are due on Tuesday.
“On the supply side, we believe agriculture and livestock resumed growth after the contraction seen in Q2. Once again, services and industry sectors are expected to show widespread increase,” said Laiz Carvalho, BNP Paribas (OTC:) economist.
Farm output recovered as growers harvested a substantial corn crop and began soybean planting, despite dry weather conditions. Cattle ranching continued to rise, with beef production heading to record levels.
Meanwhile, “on the demand side, private consumption and fixed investment growth are expected to have moderated slightly from the high Q2 prints, and net exports to have made a negative contribution,” Goldman Sachs analysts wrote in a report.
Household spending remained strong in the period, driven by a robust labor market as well as social program payments for Brazil’s poorest, one of the government’s flagship policies, whose use has been questioned in some cases.
But the current account deficit in Latin America’s No.1 economy kept widening last quarter due to Brazil’s insatiable demand for foreign goods and services that is increasingly outpacing its exports.
Goldman Sachs’ report said there was “more than the normal level of uncertainty” for third quarter gross domestic product (GDP) data given the usual revision of the country’s national accounts for the previous six quarters.
This week’s release, in spite of the expected deceleration, should support a general view growth will exceed 3% in 2024, according to the latest weekly survey by the central bank among economists.
While President Luiz Inacio Lula da Silva has touted past solid GDP readings as a sign of his economic program’s success, a rising number of investors say it is partly the result of unsustainable loose fiscal policies.
On Friday, congress leaders put the brakes on a government fiscal reform including a proposed tax relief on low wages that had further unnerved local market players hoping for spending cuts instead.
(Reporting and polling by Gabriel Burin; Editing by Chizu Nomiyama)
