The Central Bank (BC) raised its Gross Domestic Product (GDP) growth projection in 2024 from 2.3% to 3.2%. The information is from the BC’s quarterly inflation report released this Thursday, 26.
Family consumption and productive investments were mainly responsible for the change in the economy’s main indicator. The BC highlights that increases in family consumption, investments and the most cyclical sectors of the economy had already been recorded in the previous quarters of this year.
According to the report, GDP growth in the second quarter of 2024 surprised positively. “Brazilian economic activity continues to show dynamism, leading to a new round of upward revisions to growth projections for the year.”
The “robust” growth of the economy in the second quarter of 2024 contributed to the positive index, according to the monetary authority. “The increase in GDP of 3.3% compared to the second quarter of 2023 largely exceeded expectations in force at the time of the previous Report, when the median forecast in the Focus report was 1.6%”.
Inflation
Inflation expectations for this year registered an increase, according to the BC report. It went from 3.96%, in the last report, to 4.31%, below the 4.37% expected by Focus. The increase is due, according to the BC, to the impact of the climate crisis, which has made agricultural products and industrial goods more expensive.
The difficulties imposed on production by the drought in several regions of the country are expected to maintain inflationary pressure. According to the report, the drought “could delay the planting of the summer crop, compromising the cultivation of the winter crop at the ideal time”.
Furthermore, the dry and hot climate contributes to the increase in energy tariffs, impacting inflation, according to the BC. Substandard rainfall and higher temperatures also threaten energy tariffs with increases, the report says.
