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Brazil’s GDP grew faster than expected in the first quarter, bringing the weight of the largest economy in Latin America back to the level before the outbreak The pandemic hits At the end of 2019.
Official data released on Tuesday showed that the economy grew by 1.2% from the previous quarter and by 3.2% in the previous quarter. Compared with the same period last year, the economy has grown by 1%.
“If you think less than a month ago that most economists thought there would be a decline, then the growth would be very surprising. This will inspire hopes for a faster recovery in Brazil,” said Gustavo Cruz, a strategist at RB Investimentos.
After the performance was stronger than expected—analysts attributed it to the country’s booming agricultural sector, increased fixed investment, and looser sanitation restrictions—several economists said they were changing their annual growth rate forecast from The current 3% is raised to 4%.
“Looking forward, as vaccination activities accelerate and restrictions are lifted more effectively, the economy is expected to pick up in the second half of the year. All in all, the outlook for the Brazilian economy looks better, with GDP expected to grow by at least 4% this year,” Banco Mizuho São Paulo Chief strategist Luciano Rostagno said.
José Mauro Delella, consultant at Alta Vista Investimentos, added: “Although the focus is on agriculture, all sectors are showing positive growth, which is very significant given the limitations of Covid-19 “.
However, he warned that this largely depends on the trajectory of the Brazilian pandemic. Scientists have warned of a possible third wave of diseases.
Economists at the National Bureau of Statistics of IBGE said that although GDP growth in the first quarter has returned to pre-pandemic levels, it is “still 3.1% below the peak of economic activity reached in the first quarter of 2014”.
The dual threats of inflation and rising unemployment have exacerbated social dissatisfaction, which has also weakened growing optimism.
Data released last week showed that 15 million Brazilians-or 14.7% of the total population-had no jobs. In the northeast and other regions, 18.6% of citizens are unemployed.
“Due to rising commodity prices and rising inflation, stronger GDP data does not necessarily reflect better family life, because household income has not increased. The prices of necessities such as food and energy are rising, which is causing heavy losses,” Financial Planning Group Said Jayme Carvalho of Planejar.
Brazil’s consumer price index has risen by 2.7% this year and has risen by 6.7% in the past 12 months. Brazil’s central bank governor Roberto Campos Neto warned that inflation will increase further.
“Inflation is still in a spiral upward trend, and international commodity prices are the main source of pressure. This momentum started with oil and iron ore, as well as the reopening of economies in some countries and subsequent demand recovery. Recently, climate issues have also affected international agricultural prices. Bring pressure,” said João Leal, economist at Rio Bravo Investimentos.
Cruz added: “Inflation is the challenge this year.”
Additional reporting by Carolina Pulis
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