GDP should grow 0.6% in the 3rd quarter and return to the level of 2014

The Brazilian economy is expected to register growth of 0.6% in the third quarter of 2022, compared to the previous three months, according to a survey of 35 economists consulted by the Bloomberg agency.

Projections range from 0.3% (Genoa Capital) to 1% (Banco Fibra, Infinity Asset Management and Pantheon). The majority (21 economists) project growth of 0.5% to 0.7%.

With this result, the expectation is that the GDP (Gross Domestic Product) in Brazil will finally surpass the pre-recession level of 2014-2016.

At the time, the economy shrank for 11 consecutive quarters, an accumulated drop of 8%, and is only now returning to the level seen for more than eight years, a period classified by many economists as a “lost decade”.

The GDP for the third quarter will be released this Thursday (1st) at 9 am by the IBGE (Brazilian Institute of Geography and Statistics). In the second quarter, growth was 1.2% on the same basis of comparison.

Despite the slowdown, the result should be above the estimates drawn at the beginning of last quarter, before the Jair Bolsonaro (PL) government changed the Constitution to approve a series of economic stimulus measures in the election period.

The chief economist of Banco MUFG Brasil, Carlos Pedroso, projects growth of 0.4% in the quarterly comparison, with emphasis on the recovery of services provided to families, also benefited by the reopening of activities and also by the increase in Auxílio Brasil to R$ 600.

🇧🇷[O resultado] It will be more focused on household consumption, or on the service sector if you look at the production side, precisely because of this income effect, not only on the issue of Auxílio Brasil, but also the improvement in the job market, which also helps in this positive result”, says Pedroso.

He expects a retraction of 0.3% in the fourth quarter, reflecting the deterioration in the financial conditions of families that is already manifested in several economic indicators.

Economist Jason Vieira of Infinity Asset Management expects a 1% expansion in the third quarter, based on leading indicators that turned out to be more positive than previously expected.

He also highlights the behavior of services, favored by household consumption in a scenario of reopening, increase in Emergency Aid and job recovery. Still high commodity prices should benefit some other sectors.

“Some data came in above expectations, especially for August, which surprised a lot. You had a movement that, in a way, spread throughout the chain. We started to put this in the account and ended up pulling a stronger number”, says the economist, who expects a new slowdown in the fourth quarter, with growth of 0.5%.

Also among the most optimistic projections, Santander Brasil estimates an increase of 0.9% in the third quarter, with generalized growth among sectors, but with emphasis on services.

According to the bank, the result, if confirmed, would leave a statistical load of 3.1% for GDP growth in 2022 and would place the economy 0.6% above the peak of the historical series, verified in the first quarter of 2014.

The FGV GDP Monitor pointed to growth of 0.4% in the quarter, compared to the second, with a positive performance of the three major economic activities (agriculture, industry and services) and of all demand components.

The institution claims that the slowdown for the second quarter in a row signals the difficulty for the economy to maintain the pace of growth registered at the beginning of the year.

“It is not surprising that interest rates at high levels have been reflected in difficulties for the economy in the second half. Thanks to the fiscal stimuli that occurred in the economy throughout the year, the beginning of economic weakening was somewhat slow in coming”, says Juliana Trece, research coordinator.

Another indicator, the IBC-Br (Index of Economic Activity of the Central Bank), ended the third quarter with growth of 1.36% in relation to the previous three months.

Expectations for the fourth quarter are of a new economic slowdown, considering the lagged effects of the increase in interest rates and the loss of strength of some economic stimuli.