Brazil’s economy intensified fall in Q4
2023.03.02 11:01
Brazil’s economy intensified fall in Q4
By Kristina Sobol
Budrigannews.com – According to government data released on Thursday, Brazil’s economy contracted in the fourth quarter as a result of industry weakness and continued slowdown throughout the year. This casts doubt on the outlook for 2023 due to higher borrowing costs.
According to the official statistics agency IBGE, Brazil’s GDP decreased by 0.2% from the previous quarter in the three months to December, which was in line with the decline predicted by an economist poll conducted by Reuters.
According to the IBGE, industry in the largest economy in Latin America experienced a decrease of 0.3 percent over the course of the time, while agriculture and services experienced increases of 0.3 percent and 0.2 percent, respectively.
Brazil’s economy expanded by 1.9% in the fourth quarter of 2021, which was lower than the expected 2.2% increase.
Consequently, the country’s GDP grew by 2.9% in 2022, down from a post-pandemic expansion of 5% in 2021, but still performing significantly better than initially anticipated at the start of the previous year.
Agriculture saw a decrease of 1.7 percent in 2022 as a result of a decrease in the production of soybeans, Brazil’s primary crop. The services sector saw an increase of 4.2 percent and industry saw an increase of 1.6 percent.
On the demand side, household consumption increased by 4.3 percent, while investments and government spending both increased by 0.9 percent.
According to Joao Savignon, head of macroeconomic research at Kinitro, the economy is still losing steam, but the resilience of household consumption and improved agricultural results can partially offset the slowdown in 2023, resulting in a projected 1.2% GDP increase.
The central bank polls private economists weekly and projects a 0.84 percent increase in GDP this year.
The strength of the services sector, which showed growth in all surveyed activities, as well as an improved job market and fiscal stimulus from the previous administration of President Jair Bolsonaro in his reelection campaign, helped the annual performance in 2022.
President Luiz Inacio Lula da Silva, a leftist, won the election. He and ministers and allies have been emphasizing that the benchmark interest rate, which has been at a six-year high of 13.75 percent since September to combat inflation, may choke the economy and disrupt the credit market.
The Finance Ministry’s Secretariat of Economic Policy (SPE) issued a warning in a statement that the current level of interest rates makes it more difficult for businesses to roll over debt, putting economic activity at risk this year.
The SPE, on the other hand, emphasized that this year’s record grain harvest and government measures, such as an increase in the minimum wage and a larger exemption from income tax for workers with lower earnings, could boost activity.
