The Brazilian Gross Domestic Product (GDP) is expected to grow by 1.8% this year, reaching 1.3% growth in 2023. The estimate is from the Institute of Applied Economic Research (Ipea), which released this Thursdaythis Friday (30), the Overview of the Conjuncture, quarterly analysis of the Brazilian economy.
According to the institute, the service sector will be the highlight, with an estimated increase of 2.8%, while the agricultural and industrial sectors should show relative stability. On the demand side, the projection for growth in household consumption was 1.6% for this year.
After the 1% increase in GDP recorded in the first quarter of 2022, most productive sectors also performed positively in April. Ipea forecasts show that, in May, the level of activity should advance in comparison with the previous month and seasonally adjusted: 1.2% in industry, 0.6% in commerce and 0.3% in services.
The evolution of activity indicators is in line with the performance of the labor market. Recent data show that the pace of recovery has intensified over the last three months, combining a strong expansion of the employed population and a significant reduction in the unemployment rate, even with the increase in the participation rate.
This set of indicators suggests good prospects for GDP in the second quarter of 2022, with a projection of 0.6% growth in the period, in seasonally adjusted terms, compared to the previous quarter, and 2.3% over the same quarter of the year. past.
Slowdown
Also according to Ipea, for the second half of this year there is an expectation of a slowdown in economic activity, due to external and internal factors. External aspects point to lower growth and greater uncertainty, given the increase in observed and expected rates of inflation in most countries, and the persistence of the war between Russia and Ukraine – which should prolong the current problems in the production chains.
From the point of view of internal factors, the persistence of high inflation rates, in addition to inhibiting consumption through the reduction of real family income, has led to the tightening of monetary policy in the country, whose effects affect the credit market and tend to to intensify in the coming months.
Growth in 2023
For the next year, the projection for GDP growth is 1.3%. In terms of economic activity, 2023 should be timid at the beginning, but characterized by acceleration throughout the year. The scenario is based on two hypotheses. First, with the end of the war in Ukraine, the alleviation of problems on the supply side will reduce much of the inflationary pressure from abroad, allowing monetary policy to fulfill its role of gradually reducing inflation without the need for a deeper fall in prices. activity levels.
Furthermore, at the beginning of next year, an important part of the adverse impact of the domestic monetary tightening on economic activity has already to havehas occurred.
There is an expectation of growth for all sectors of the economy next year: agriculture (2.5%), industry (1%) and services (1.4%). On the demand side, the highlights are household consumption and Gross Fixed Capital Formation (GFCF), with increases of 1% and 3%, respectively.
