BRASILIA (Reuters) – Brazil’s Gross Domestic Product (GDP) grew 1% in the first quarter of this year from the immediately preceding three months, accelerating from the pace seen at the end of 2021, according to data released on Thursday by the Instituto Brazilian Institute of Geography and Statistics (IBGE).
See comments from financial market professionals:
ALBERTO RAMOS, ECONOMIST AT GOLDMAN SACHS:
“The economy performed satisfactorily in the 1st quarter, despite the significant tightening of financial conditions and the acceleration of inflation. Services activity was particularly robust, particularly among the segments that had been most impacted by the pandemic. Some of the resilient growth momentum will carry over to the 2nd quarter, but the 2nd half is expected to face intense headwinds such as very tight domestic financial conditions, double-digit inflation, record levels of household debt, noise and uncertainty generated by a polarizing election and the fading favorable impact of reopening the economy.”
RODOLFO MARGATO, XP ECONOMIST:
“Brazil’s GDP grew below expectations in the 1st quarter, but confirmed the strength of domestic activity at the beginning of 2022. We expect a significant slowdown in domestic activity in the 2nd half of the year, mainly due to the tightening of monetary policy. We reinforce the 1.6% increase forecast this year.”
ANDRÉ PERFEITO, CHIEF ECONOMIST AT BROKERAGE FIRM:
“Our attention is drawn to the 3.5% drop in Gross Fixed Capital Formation (investments). Another factor that draws our attention on the negative side was the external sector, which had a good result due to the increase in exports (5% increase at the margin), but imports fell (down 4.6%) suggesting weaker domestic activity. even with a real that appreciated in the period. In general, the numbers reiterate an improvement at the margin, after all, GDP accelerated from 0.7% to 1%, but they also show the challenges of the current moment.”
LUCAS MAYNARD, ECONOMIST OF SANTANDER:
“On the supply side, the services sector boosted the rise, while industry and agricultural production disappointed. On the demand side, weaker-than-expected domestic demand, with the external sector helping. This result puts the economy 1.6% above the pre-pandemic mark (4Q19) and implies a ‘carryover’ of 1.5% for 2022. We project GDP growth of 1.2% in 2022, followed by a contraction of 0.6% of GDP in 2023.”
DANILO PASSOS, WHG MANAGER ECONOMIST:
“The number came in line with our projection. Even the opening did not bring big surprises, it was already imagined that GDP would be very determined by trade and services, basically by consumption. I think some of this history is still related to reopening, resumption of mobility. We still expect the second quarter to have a positive performance, with growth of around 0.8%, but losing a lot of strength in the second half of this year.”
LUCIANO SOBRAL, CHIEF ECONOMIST OF NEO INVESTIMENTOS:
“Result almost entirely driven by services, something to be expected, due to the effect of post-vaccination reopening. Industry walked sideways and agriculture had a strong fall against the first quarter of last year, mainly due to the smaller soybean crop. (Result) This confirms the last optimistic wave of revisions in GDP for the year. With this result, zero growth in the next three quarters would give annual GDP growth of 1.5%. We project 1.8%, with some further growth, particularly in the second quarter.”
GUSTAVO SUNG, CHIEF ANALYST AT SUNO RESEARCH:
“High-frequency data already showed an improvement in economic activity after the outbreak of the Ômicron variant. Highlight for services, which registered an increase of 1%. The result reflects the opening of the economy and various tax benefits, such as the readjustment of the minimum wage, Auxílio Brasil and the release of the FGTS. We also highlight the decline in the agricultural sector, which suffered from crop failure in important crops, such as soybeans and rice. Finally, Brazil continues to take advantage of the favorable scenario for commodities, generating good results in exports.”
(Newsroom Brasília; Edited by Luana Maria Benedito and Alexandre Caverni)
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