Brazil Economy Contracts 0.3% in Q1

The Brazilian economy shrank 0.3 percent on the quarter in the first three months of 2016, following a downwardly revised 1.3 percent contraction in the previous period and beating market expectations of 0.8 percent decline. It was the smallest drop since the first quarter of 2015, aided by rising exports and a rebound in government expenditure while consumer spending and investment continued to shrink.

It was the fifth consecutive quarter of contraction, but the smallest in one year. Fixed investment fell for the tenth consecutive quarter by 2.7 percent (from -4.8 percent in Q4) and households' consumption expenditure dropped for the fifth straight quarter by 1.7 percent (from -0.9 percent); while government consumption expenditure increased by 1.1 percent (from -2.9 percent) and exports jumped 6.5 percent (from +0.1 percent in Q4). Imports shrank 5.6 percent (from -5.5 percent in Q4).

On the production side, the services sector fell at a slower 0.2 percent (from -1.5 percent in Q4), as retail trade (-1 percent), financial intermediation and insurance (-0.8 percent) and information services (-0.7 percent) showed the largest declines. Industry contracted 1.2 percent (from -1.6 percent in Q4), dragged down by mining (-1.1 percent) and manufacturing (-0.3 percent). Agriculture shrank 0.3 percent (from +2.9 percent in Q4).

Year-on-year, the GDP shrank 5.4 percent, easing from a 5.9 percent drop in the fourth quarter and beating market expectations of 6 percent decline.

Brazil Economy Contracts 0.3% in Q1

IBGE | Joana Ferreira |
6/1/2016 2:02:56 PM