Brazil’s economy is expected to slow down in Q4, with 0.5% growth forecasted, down from 0.9% in Q3. This deceleration is attributed to lower private consumption and investment. The government remains focused on fiscal stability amidst rising economic concerns, projecting a growth of 3.4% for 2024.
Brazil’s economy is expected to slow down in the fourth quarter of the previous year, primarily due to weaker private consumption and a decline in investment. A Reuters poll predicts a growth rate of 0.5% for the October-December period compared to the previous quarter, with an annual rate of 4.1%. This marks a decrease from 0.9% growth recorded in the third quarter.
Analysts from J.P. Morgan noted that the deceleration is attributed to reduced private consumption and the first investment drop in over a year. Conversely, solid government consumption, positive net exports, and inventory changes are anticipated to support overall growth.
Brazil’s economy, reliant on federal spending, faces rising fiscal concerns which have triggered market selloffs. Additionally, foreign direct investment increased less than the current account deficit, placing further limitations on economic expansion.
On the supply side, LCA 4intelligence’s Bruno Imazumi forecasted moderate growth across sectors, including 0.4% in services, 0.1% in industry, and 1.8% in agriculture. The financial and insurance sectors are expected to show strong performance.
The release of gross domestic product data is expected to confirm that economic growth exceeded earlier market estimates. Economists had revised growth predictions upward due to a strong job market and increased social spending, which effectively offset the adverse factors of high interest rates.
The consensus for 2024 projects an annual growth of 3.4%, significantly higher than the previous year’s estimate of 1.6%. However, for 2025, the government reduced its growth forecast to 2.3% amid ongoing monetary tightening by the central bank. Despite challenges, government officials have stated there will be no extraordinary measures to stimulate growth, emphasizing adherence to Brazil’s fiscal framework.
Brazil’s economic growth forecast for the fourth quarter of last year indicates a slowdown primarily driven by decreases in private consumption and investment. Although government consumption and certain sectors like agriculture are expected to contribute positively, overall growth will reflect a significant adjustment from previous quarters. With revised growth estimates for 2024 and a cautious outlook for 2025, the government’s focus remains on fiscal stability rather than aggressive growth measures.
Original Source: www.marketscreener.com
