Brazil’s Q1 GDP Growth Rate Continues to Show Retraction

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The Brazilian economy continues to deteriorate after registering the worst annual GDP result in 25 years in 2015, with the GDP growth retracting another 0.3 percent during the first quarter of 2016, according to the Brazilian Institute of Geography and Statistics (IBGE).

The Institute released the Q1 result on Wednesday, June 1st, showing a negative result for the GDP for the fifth consecutive quarter. In comparison to the first quarter of 2015, the GDP growth retraction was of 5.4 percent, totaling R$1.47 trillion during the first three months of 2016.

According to the IBGE the additional growth retraction in the first quarter of the year is a reflection of the decline of GDP growth in all sectors of the economy. The greatest retraction was seen in capital goods investment, with a retraction of 2.7 percent in comparison to Q4/2015, followed by a retraction of 1.2 percent in industry and -0.2 percent in services.

Unlike 2015, when the agribusiness sector was the only sector to register a GDP growth, the agribusiness sector in the first three months of 2016 registered a -0.3 percent retraction.

Household consumption fell by 1.7 percent in the first quarter of the year, while government spending increased by 1.1 percent. In relation to the foreign sector, the export of goods and services registered an expansion of 6.5 percent while imports of goods and services suffered a retraction of 5.6 percent from January through March of 2016.

With the economy slowing down, investment rates in the first quarter decreased in comparison to the same period last year, from 19.5 percent of the GDP to 16.9 percent of the GDP, with savings rate following the decline, from 16.2 percent to 14.3 percent in the same comparison period.

The latest forecasts from financial institutions surveyed by Brazil’s Central Bank for the weekly Focus Survey call for a retraction of 3.81 percent for the overall 2016 GDP, approximately the same retraction as seen last year.