Despite a slight decline in economic activity in March and April, the Central Bank’s index for Brazilian economic activity (IBC-Br) still showed an increase of 2.08% year-to-date and a 4.01% increase over the past 12 months. This growth has been fueled by proxies for agriculture, manufacturing, and services output, as well as an index for tax collections.
While many analysts view the IBC-Br as a positive sign for Brazil’s economy due to its annual growth, others have expressed concerns about recent floods in the southern region and their potential impact on economic growth. Despite these concerns, Itaú, Brazil’s largest private bank, is maintaining a GDP growth forecast of 2.3% for the year.
In Q1, Brazil saw economic growth of 0.8%, driven by the service sector and increased household spending. This growth is returning Brazil to its typical pattern of domestic demand-driven growth. Goldman Sachs’ lead economist for Latin America, Alberto Ramos, believes that fiscal stimulus, a higher minimum wage, and improved credit conditions will benefit Brazil’s economic activity in 2024. However, Ramos notes that some factors like restrictive monetary policy and policy uncertainty could impact this growth.
