According to the Brazilian Institute of Statistics (IBGE), Brazil’s GDP increased by 2.5 percent compared to the first quarter of 2023. This growth has raised concerns about inflation at the central bank, according to William Jackson, chief emerging markets economist at Capital Economics.
In May, the government raised its growth projection for 2024 to 2.5 percent. However, the estimates do not factor in the impact of historic flooding in the southern state of Rio Grande do Sul, which is one of the country’s largest economies. Jackson believes that the growth rebound is temporary and does not signify the beginning of a strong recovery.
Looking ahead, Jackson and Capital Economics predict a weaker second quarter and estimate 2024 growth to be between 1.5-1.8 percent. The floods in Rio Grande do Sul are expected to impact growth, and the strength of agricultural production seen in Q1 may not be sustained.
Overall, while Brazil’s GDP showed positive growth in the first quarter of 2023, concerns about inflation and the potential impact of the flooding in Rio Grande do Sul are looming over the country’s economic recovery.