Brazil's gross domestic product expanded 9.0% in the first quarter compared with the first quarter a year earlier, the Brazilian Census Bureau, or IBGE, said Tuesday. That was the largest year-on-year growth recorded under the IBGE methodology implemented in 1995.
The robust first-quarter growth will likely be seen as another signal that Brazil's economy is now overheating, joining soaring industrial production and rising consumer prices as growing concerns at the Brazilian Central Bank. The bank, already wary about inflationary pressures, started a monetary tightening cycle in April.
The bank's Copom rate-setting panel raised the benchmark Selic base interest rate by 75 basis points, the first increase in nearly two years. The Selic currently stands at 9.5%.
Surging domestic demand has pushed the local inflation rate above the government's official year-end target of 4.5%. Through mid-May, the rolling 12-month IPCA-15 inflation rate stood at 5.26%. Full-month May inflation figures will be released Wednesday, before the bank makes its interest-rate decision.
Output at Brazil's mines and factories surged in the first quarter, reflecting the tax cuts on car sales and big-ticket items such as refrigerators and washing machines that were implemented in the wake of last year's recession.
Brazil's powerhouse industrial sector surged 14.6% year-on-year in the first quarter, the IBGE said. The service sector also recorded year-on-year growth of 5.9%, while the country's massive agriculture industry registered growth of 5.1%.
In market value, Brazil's GDP was 826.4 billion Brazilian reals ($441 billion) in the first quarter, up from BRL717.4 billion in first quarter of 2009.
Investments also jumped year-on-year in the first quarter to 18.0% of GDP, up from 16.3% of GDP in the first quarter of 2009.
Family consumption, meanwhile, increased 16% in the first quarter to BRL526.7 billion compared with BRL455.6 billion in the year-earlier period, the IBGE said. Government spending rose 6.2% year-on-year to BRL157.3 billion, up from BRL148.1 billion.
The IBGE also revised GDP figures from past quarters, showing that Brazil's emergence from the recession was stronger than previously thought.
Quarter-on-quarter in the fourth quarter, GDP was revised upward to growth of 2.3% from previously reported growth of 2.0%. Third-quarter GDP was revised upward to growth of 2.2% from the previously reported 1.7% gain. Second-quarter GDP was revised upward to growth of 1.5% versus the previously reported growth of 1.4%.
Meanwhile, the quarter-on-quarter decline in first-quarter GDP was stronger than previously reported, shrinking 1.5% from the fourth quarter compared with a 0.9% decline previously reported.