Sunday, September 24, 2023
HomeEconomyBrazil economic activity unexpectedly falls 2% in May

Brazil economic activity unexpectedly falls 2% in May


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BRASILIA (Reuters) – Brazil’s Economic activity fell for the month, suggesting that economic activity in Brazil declined in May. While analysts have been consistently raising their forecasts for this year, the country’s growth trajectory remains non-linear.

The IBC-BR index of economic activity, a key measure of gross domestic product (GDP), fell 2.0% on a seasonally adjusted basis from April, according to Analysts polled by Reuters who expected zero growth were disappointed.

This is the largest monthly drop since March 25. The observed data series recorded 2. Year-on-year growth %, accumulative growth rate is 3. 11% in the pastmoon.

Gabriel Couto, Economist at Santander Bank (BME: 100SAN ) Brazil said the dismal results could be attributed to the contribution of record food production during the end – Summer crops.

Finance Minister Fernando Haddad told reporters that the figures were “in line with expectations” in a remarkable environment of persistently high borrowing costs.

“The central bank’s intended slowdown has come strongly, and we need to be cautious about what might happen,” he said, stressing that the current level of real interest rates places a heavy burden on the economy.

The central bank’s benchmark interest rate is stable at a cycle high .% Since September, in response to inflationary pressures. Still, it recently said a rate cut could come in August if inflation conditions continue to improve.

Andres Abadia, chief Latin American economist at Pantheon Macroeconomics, in a note to clients The results underscore the need for rate cuts, the report said.

“Several key economic sectors are under pressure against a backdrop of tightening financial conditions but low inflation, a resilient labor market and key exports to Brazil remain Favorable external conditions suggest that economic growth will not stall,” he said.

Economists have been revising expectations for Latin America’s largest economy’s performance this year, particularly with a stronger-than-expected first quarter, driven by a boom in agriculture. department.

However, agricultural growth is expected to slow in the second half due to seasonal factors.

According to the central bank’s weekly survey of private economists, GDP growth is 1000 is now estimated at 2.%, down from 2.9% 52, but still significantly higher than the initial forecast of about 0.8% to start the year.

Nonetheless, future expectations point to a slowdown due to tight finances and high borrowing costs. 25



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