07/16/2024 – 7:29
The Central Bank’s Economic Activity Index (IBC-Br) rose 0.25% in May, compared to April, in the seasonally adjusted series. Despite falling below market projections (a 0.3% increase), the indicator reached 149.6 points, the highest level in the historical series. Compared to May of last year, growth was 1.3%. The IBC-Br is considered a “preview” of the GDP variation, calculated by the IBGE.
The drop in industrial production in May was more than offset by positive results in retail trade and the stability of services, assessed MAG Investimentos economist Felipe Rodrigo de Oliveira. “This is what contributed to this positive result of the IBC-Br,” he said.
For the chief economist at Banco ABC Brasil, Daniel Xavier, the May result reinforced the “constructive” scenario for domestic activity in 2024. He highlighted the “not very significant” effect of the floods in Rio Grande do Sul on the regional and national economy, being more restricted to the state’s agricultural and manufacturing production.
“Even in a context of global uncertainty (interest rates in the United States) and local uncertainty (Rio Grande do Sul and fiscal policy), as experienced in the second quarter, the economy has performed positively. This is a reflection of the tight labor market, with real wage gains (linked to the minimum wage) and income transfers by the public sector,” he said.
GDP in the quarter
The scenario indicated in May, however, was still insufficient to raise the financial market’s estimates for GDP performance in the second quarter and 2024. The medians for these periods continue to point to increases of 0.5% and 2.2%, respectively, according to research carried out yesterday by Projeções Broadcast.
ABC Brasil projects growth of 0.4% for the GDP in the second quarter and 2.2% for the year, but Xavier highlights that the bias is upward for both estimates, given the positive behavior of leading indicators – such as economic confidence surveys.
A little more optimistic, economist Pedro Crispim, from G5 Partners, projects a 0.5% increase in GDP for the second quarter. The firm’s tracking estimate for GDP for the period was 0.3% in early June, but was updated as the most recent activity data was released. “It can be said that, in general, economists overestimated the impact of the rains in the South on the GDP of the region and of all of Brazil,” said Crispim.
For the year, the G5 maintains, for now, the expectation of GDP growth at 2.1%, and Crispim mentions that the higher Selic level than initially imagined for the end of the year may moderate the level of activity a little, especially in the last quarter.
The information is from the newspaper The State of S. Paulo.
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