Third quarter GDP exceeded expectations, government says

Official forecasts predict a 3% growth this year

Published on 06/12/2023 - 14:17 By Wellton Máximo - Brasília

Despite the slowdown from previous quarters, the 0.1 percent growth in Brazil’s gross domestic product (GDP) in the third quarter exceeded expectations, the ministers of Finance, Fernando Haddad, and Planning, Simone Tebet, said Tuesday (Dec. 5). The planning minister was more optimistic than her finance counterpart.

On his last leg of his trip to Germany, Minister Haddad said the GDP could close 2023 with slightly higher growth than the three percent projection published at the end of November by the Ministry of Finance. However, he said the result depends on the Central Bank maintaining its policy of cutting interest rates.

“We had a positive but weak GDP, but, with the cuts in interest rates, we hope to close out this year with a GDP growth above three percent, and we’re hoping for growth in the 2.5% range next year. But the Central Bank needs to do its job,” he said. Officially, the Finance Ministry estimates a growth of 2.2 percent for 2024.

On her social network, Tebet pointed out that this year’s expansion could be 3.1 percent. “With today’s information from [statistics bureau] IBGE on the economy in the third quarter, the GDP for 2023 should grow by around 3.1 percent, if the economy remains stable in the last quarter of the year. That’s more than the world average. Growth in the economy and in income brings a better life to Brazilians, which is the main reason for our work,” she wrote on X.

In an official statement, the Ministry of Planning and Budget said that the 0.1 percent rise was due to the good performance of the services sector and industry. Another positive highlight was household consumption.

“With stable activity in the last quarter of 2023, Brazil’s GDP is expected to grow by around 3.1 percent, above the world average projected by the IMF [International Monetary Fund] of three percent for 2023,” said the ministry, citing the most recent edition of the World Economic Outlook report, released by the IMF in October.

G20

In another note, published late this morning, the Finance Ministry pointed out that Brazil had the fifth best performance among the G20 countries that have made their GDP for the third quarter public. The 0.1 percent growth from the previous quarter, the ministry pointed out, was equal to that of France and was only behind South Korea (+0.6%), Indonesia (+0.8%), Mexico (+0.9%) and the US (+1.3%).

In the ministry’s view, the GDP should increase again in the fourth quarter, with industry benefiting from the decline in interest rates and programs to boost investment and the construction of affordable housing. In addition, China’s stimulus policy should continue to stimulate Brazilian exports.

With regard to services, the ministry predicts that job creation, an increase in the wage bill, and an expansion in income should contribute to the sector’s growth. The agency also cited lower default and the recent improvement in families’ financial conditions.

Translation: Fabrício Ferreira -  Edition: Juliana Andrade

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