Brazil’s economy is expected to have slowed in Q4 of last year, growing by 0.5%, down from 0.9% in Q3 due to reduced private consumption and investment. Yearly growth is estimated at 4.1%. Despite government spending and sector growth support, fiscal concerns remain. Projections for 2024 and 2025 indicate cautious optimism amid ongoing monetary tightening.
Brazil’s economy is projected to have slowed in the fourth quarter of the previous year, attributed to reduced private consumption and investment growth, as indicated by a recent Reuters poll of economists. The economy is anticipated to have grown by 0.5% from October to December, a decline from the 0.9% growth seen in the third quarter. The year-on-year growth rate is estimated at 4.1%. Analysts from J.P. Morgan noted, “This step down was… led by slower (private) consumption and the first decline in investment in over a year.”
Despite the slowdown, solid government consumption, a slight positive impact from net exports, and inventory growth are expected to maintain a positive growth rate at the end of last year. However, Brazil’s dependence on federal spending has raised fiscal concerns, contributing to market selloffs. Furthermore, foreign direct investment growth was outpaced by the current account deficit, limiting overall economic expansion.
LCA 4intelligence’s economist Bruno Imazumi projected varying growth rates across sectors in the fourth quarter: a 0.4% increase in services, a 0.1% rise in industry, and a 1.8% growth in agriculture. He highlighted the strength in the financial intermediation and insurance sectors within services. GDP data set to be released is expected to reveal that Brazil’s economic growth for 2024 exceeds initial forecasts, attributed to an improving job market and increased social spending that mitigated the impact of high-interest rates.
The consensus estimate from a January Reuters poll indicates a projected annual growth of 3.4% for 2024, significantly higher than the 1.6% rate anticipated at the beginning of last year. However, Brazil’s government recently revised its growth forecast for 2025 downward to 2.3% amid ongoing monetary tightening. Despite the challenges, a senior government official stated that no extraordinary measures would be implemented to stimulate growth, affirming the administration’s commitment to fiscal stability.
In summary, Brazil’s economic growth is expected to decelerate in the fourth quarter of the previous year, primarily due to reduced private consumption and investment. While government spending and other sectors provide some support, fiscal concerns persist, particularly regarding foreign investment. The overall economic outlook remains cautiously optimistic for 2024, with significant growth projections despite monetary challenges. The government’s commitment to fiscal integrity signifies a focus on long-term stability over short-term growth strategies.
Original Source: money.usnews.com
