Brazil Annual GDP Growth Weakest in 1 Year at 1.0%

The Brazilian gross domestic product advanced by 1.0 percent year-on-year in the second quarter of 2018, easing from a 1.2 percent rise in the previous three-month period and missing market expectations of a 1.1 percent increase. It was the slowest expansion since the second quarter of 2017. Household spending slowed and exports fell due to the truckers' strike that paralyzed key sectors of the economy.

A ten-day nationwide truck strike over fuel prices started on May 21st and disrupted the country's supply chains and ports, leading to shortages of fuel and food and lowering exports.

From the expenditure side, household spending went up 1.7 percent, below 2.8 percent in Q1, posting the lowest increase in a year. Also, net external demand contributed negatively to growth, as exports fell 2.9 percent (6.0 percent in Q1) while imports grew 6.8 percent (7.7 percent in Q1). On the other hand, government spending recovered slightly (0.1 percent compared to -0.8 percent) and fixed investment quickened (3.7 percent compared to 3.5 percent), mainly due to higher production and imports of capital goods.

From the production side, the services sector grew 1.2 percent after rising 1.5 percent in Q1, as output expanded less for trade (1.9 percent from 4.5 percent); transport and storage (1.1 percent from 2.8 percent) and public administration, defense, health, education and social security (0.5 percent from 0.6 percent). Meanwhile, upturns were recorded in information and communication (0.4 percent from -3.3 percent); finance, insurance and related (0.6 percent from 0.1 percent) and real estate activities (3.0 percent vs 2.8 percent). Also, industrial production eased (1.2 percent from 1.6 percent), amid a sharp slowdown in manufacturing activity (1.8 percent from 4.0 percent) and a contraction in the construction sector (-1.1 percent from -2.2 percent). In contrast, output rebounded in mining and quarrying (0.6 percent from -1.9 percent) and advanced faster for utilities (3.1 percent from 0.6 percent). Finally, the agricultural sector shrank at a softer pace (-0.4 percent from -2.6 percent).

On a quarterly basis, the Brazilian economy expanded only 0.2 percent, following a downwardly revised 0.1 percent advance in the previous quarter but above market consensus of a 0.1 percent rise.

Brazil Annual GDP Growth Weakest in 1 Year at 1.0%

IBGE | Luisa Carvalho |
8/31/2018 3:03:35 PM