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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

December 19, 2023

How Will Brazil’s Economy Perform in the Coming Year?

Brazil’s economy, the largest in Latin America, grew 0.1 percent in the third quarter of this year, surprising economists. São Paulo is pictured. // File Photo: Aurélio Scetta via Creative Commons.

Q

  • Brazil’s economy grew 0.1 percent in this year’s third quarter as compared to the prior three-month period, according to official data released Dec. 5. The growth surprised economists in a Bloomberg survey who had expected a median contraction of 0.3 percent. In the third quarter, the economy grew 2 percent, year-on-year. How well is President Luiz Inácio Lula da Silva managing Brazil’s economy, and what are the economy’s major driving forces? How is Brazil’s economy likely to perform in the coming year? Which industries are seeing the most strength, and which are struggling?

A

Drausio Giacomelli, head of emerging market strategy and economics at Deutsche Bank: “The Brazilian economy surprised again—and once more to the upside. The high-frequency indicators pointed to a mild contraction, but consumption pushed activity above zero as compared to the previous quarter. This is encouraging, especially as it points to a coveted soft-landing after a massive increase in interest rates (almost 12 percentage points from mid-2021 to mid-2022). Commodities and especially agribusiness led a fast pace of growth in the first half of the year, while services benefited from yet another round of increase in transfers from the government. Industry and investment lagged. In the second half of the year, the boost from agro and commodities waned, while services decelerated. However, transfers plus resilient labor markets have been supportive enough to prevent…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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