Brazil’s Economic Update: A 2023 Overview

From February 26 to March 1, 2024, we’ll see a detailed review of Brazil’s economy. This update will include GDP, inflation, and job data.

At the same time, the U.S. will spotlight the January Personal Consumption Expenditures (PCE), a critical inflation measure the Federal Reserve uses to guide its monetary policy.

GDP: What to Expect

Predictions suggest Brazil’s economy barely moved in the final quarter of 2023. The debate is whether it went up or down.

Itaú Unibanco expects a slight shrinkage of 0.1% quarter-on-quarter but a 2.0% increase over the year.

Services likely grew by 1.8% and industry by 1.7% annually. Agriculture might show 5.6% year-on-year growth.

“If our Q4 2023 GDP guess is right, we’ll see a 2.9% yearly growth, led by a 16.1% surge in agriculture, followed by services at 2.4% and industry at 1.3%,” Ita says.

In addition, Banco Inter recently adjusted its Q4 GDP forecast from no change to a 0.2% rise, finishing 2023 with 3.1% growth.

“The last quarter’s economy was unexpectedly strong, thanks to the industrial recovery,” Inter notes. “While consumer spending slowed, retail and services still had a positive impact.”

The IBGE will release the official GDP figures next Friday.

Inflation on the Rise

Next on the economic calendar, the February IPCA-15, due Tuesday, is likely to show a jump in consumer prices.

Bradesco predicts a 0.83% rise, influenced by school fees and fuel tax increases. It also points to enduring inflation concerns.

For perspective, the full index rose by 0.42% in January, with February’s full IPCA predicted at 0.73%.

Jobs and U.S. Rates

Thursday will bring January’s Brazilian unemployment rate, a statistic closely watched by the Central Bank.

However, the global focus remains on U.S. interest rate possibilities, with January’s PCE index providing crucial inflation insights.

“Economists are on the lookout for inflation stability, a precursor to rate adjustments,” says Julio Hegedus from Mirae Asset Brasil, highlighting the risk of persistent inflation.

Economic Calendar Highlights

• Monday (26): Construction Cost Index for February, BRF Earnings.
• Tuesday (27): Boletim Focus, IPCA-15 for February, earnings from XP and Engie.
• Wednesday (28): Rental inflation for February, U.S. Q4 GDP update, earnings from Suzano and Ultra.
• Thursday (29): CMN meeting, January unemployment rate, U.S. January PCE index, China’s PMI updates, earnings from Ambev, Copel, and MRV.
• Friday (1): Brazil’s GDP for Q4 and the full year of 2023.

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