Brazil recorded stronger-than-expected growth (1.9%) in the first quarter, a welcome rebound for the start of left-wing President Luiz Inacio Lula da Silva’s term of office.
This gross domestic product (GDP) result, published on Thursday by the IBGE statistics institute, was higher than the average forecast (1.3%) of analysts consulted by Valor daily.
Latin America’s leading economy has thus experienced a clear rebound after seeing its GDP contract by -0.1% in the fourth quarter of 2022, according to figures revised on Thursday.
The agriculture sector, engine of Brazilian growth, saw its biggest quarterly increase since 1996 (+21.6%).
“Climatic problems had a negative impact on agriculture last year, while this year a record soya harvest is expected,” Rebeca Palis, coordinating manager of IBGE’s public accounts sector, was quoted as saying in a statement.
This is the second piece of good news on the economic front in two days for the Lula government, following a fall in the unemployment rate to 8.5% - Brazil’s lowest in eight years - for the period from February to April.
William Jackson, an analyst at the Capital Economics consultancy, believes, however, that “the details of the figures show that the Brazilian economy is not as strong as this 1.9% growth might suggest.”
Services grew by just 0.6%, while industry contracted slightly (-0.1%). Jackson also notes that household consumption grew by only 0.2%.
Capital Economics has nonetheless decided to significantly raise its growth forecast for 2023 from +1% to +2.3%.
