Brazilian Economy Grows the Least in Near a Year


The Brazilian gross domestic product advanced by 1.2 percent year-on-year in the first quarter of 2018, compared to a 2.1 percent rise in the previous three-month period and market consensus of a 1.3 percent growth. It was the slowest expansion since the second quarter of 2017, as fixed investment and exports grew less and government spending contracted further.

From the expenditure side, fixed investment rose by 3.5 percent, below 3.8 percent in Q4, mainly reflecting uncertainty about elections scheduled for October; and government spending contracted more (-0.8 percent from -0.4 percent). In addition, net external demand contributed negatively to growth, as imports climbed 7.7 percent (8.1 percent in Q4) and exports increased at a softer 6.0 percent (9.1 percent in Q4). In contrast, household spending expanded faster (2.8 percent from 2.6 percent), posting the strongest rise since the fourth quarter of 2014 (2.8 percent), amid record-low interest rates and lower inflation.

From the production side, the services sector grew 1.5 percent following a 1.7 percent gain in Q4, as output rose less for transport and storage (2.8 percent from 4.4 percent); financial services (0.1 percent from 0.3 percent) and declined for information and communication (-3.3 percent from 1.5 percent). Conversely, gains were recorded in public administration, defense, health, education and social security (0.6 percent from 0.3 percent); trade (4.5 percent from 4.4 percent) and real estate activities (2.8 percent from 2.1 percent). Also, industrial output eased (1.6 percent from 2.7 percent), due to a slowdown in manufacturing activity (4.0 percent from 6.0 percent) and contractions in mining (-1.9 percent from -0.1 percent) and construction (-2.2 percent from -1.6 percent). Meanwhile, the utilities sector expanded faster (0.6 percent, after showing no growth in Q4). Finally, the agricultural sector shrank 2.6 percent, the steepest contraction since a 3.6 percent decline was seen in the third quarter of 2016, compared to a 6.1 percent surge in Q4.

On a quarterly basis, the economy advanced 0.4 percent, following an upwardly revised 0.2 percent expansion in the previous quarter and in line with market expectations. It marks the fifth straight quarter of growth after a 2-year recession in 2016 and 2015.

Brazilian Economy Grows the Least in Near a Year


IBGE | Luisa Carvalho | luisa.carvalho@tradingeconomics.com
5/30/2018 2:10:26 PM