The Brazilian GDP in the second quarter surprised positively, rising by 1.2% and coming in above the average expected by the market. The service sector emphasized its importance to the economic growth of this period. The sector advanced 1.3% in the quarter and should continue to be the driver of the economy through the end of the year, according to analysts. Some homes have already begun revising their forecasts for Brazilian GDP in the year following the result released today.
This is the case of Goldman Sachs, which updated its growth forecast from 2.2% to 2.9%. The bank notes that in addition to the better-than-expected second quarter, growth rates for the fourth quarter of 2021 and the first quarter of 2022 were revised upwards as well.
“Analysts have significantly underestimated the impact of the services sector on activity,” admits economist Gustavo Cruz, strategist at RB Investimentos. Following the release of Q2 GDP, RB Investimentos revised its economic growth forecast for 2022, from the baseline (+2%) scenario to the optimistic (+2.5%) scenario.
We have seen growth particularly related to transportation, due in large part to changes in the consumption habits of the population. E-commerce makes this segment more dynamic, but it also has the offshore sector. Every part of the transportation, warehousing and international freight goods Ultimately it counts in services,” explains Matthew Pisani, economist at CM Capital. The house is also revising its 2022 GDP estimates upwards, following the result released today.
The improvement in activity since the beginning of the year has continued, mainly due to the reopening of the economy after the easing of epidemic restrictions and the recovery of the labor market. Another favorable aspect is tax benefits, such as the release of extraordinary withdrawals from the FGTS and the expectation of the thirteenth salary for retirees and retirees. Income transfer programs such as Auxílio Brasil and invoice Truck drivers promise to continue fueling the economy in the second half of the year.
“the number [do segundo trimestre] It was very strong and powerful, which indicates that a large part of the economic activity is being created in Brazil. That’s what we call internalization, we’re taking out the external components, says Victor Candido, chief economist at RPS Capital. The external sector is not highlighted, imports have grown [7,6%] Exports fell [-2,5%]. “
Domestic absorption increased 2.4% in the quarterly comparison after declining 0.3% between January and March this year.
On the demand side, one of the highlights was household consumption, which was up 2.6%. “This is happening due to the resumption of work, which, although the average real income per worker is still low, has led to an increase in salaries in the wake of more people working,” explains Andre Perfetto, chief economist at Necton. Despite the good result, the house has not yet revised its GDP forecast for 2022. “We will look in detail at other components such as the external sector, which declined with the expressive rise in imports and the decline in exports.”
Forecast for GDP in the coming quarters
“It remains to be seen how the second half of the year will be, as a slowdown is expected due to the effects of monetary policy,” says Luca Mercadanti, an economist at Rio Bravo. With today’s result, the house should revise its GDP forecast for 2022 to a level close to 2.5%, compared to the previously expected 2%.
In addition to beating expectations, second-quarter GDP brings a positive outlook throughout the year, says Liz Carvalho, economist for Brazil at BNP Paribas. He explains that “high household consumption and investments, and domestic assimilation, is a very positive combination that brings good perspectives.” The bank expects growth of a similar size for the Brazilian economy in the third quarter (at 1%) and is also revising the forecast for closed GDP for 2022.
For the second half of the year, activity is expected to slow due to the effects of higher interest rates and higher inflation. However, labor market dynamics, tax cuts on critical items (fuel and energy) and new tax incentives, such as PEC dos Auxlios, will give fresh impetus, says Gustavo Song, chief economist at Suno Research.
We continue to expect a slowdown in domestic activity this term. However, a steady recovery of labor market conditions combined with short-term fiscal stimulus should allow for a smooth economic calm,” wrote Rodolfo Margato, economist at XP.
The house’s forecast for GDP growth in 2022, currently at 2.2%, has an upward slope. “Finally, we also attribute a positive bias to the projection of a 0.5% GDP increase for 2023, despite monetary policy in largely deflationary territory and a weak global economy,” says Margatto.
Itai maintained its forecast that the economy will remain relatively stable through the end of the year. The bank expects GDP to rise 0.1% in the third quarter and contract by 0.1% in the fourth. “The fiscal stimulus is likely to be offset by the effects of contractionary monetary policy and a slowdown in global activity,” the analysts wrote. However, the bank also put an upward bias on its 2022 GDP forecast, currently at 2.2%.
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