Second-half slowdown doesn’t spoil Brazil’s 2023 GDP results

Contrary to the expectations of many analysts, the Brazilian economy didn’t shrink in the last quarter of 2023. Instead, it hit the brakes. And with Q4 figures in the books, Brazil can now confirm its GDP grew 2.9 percent throughout last year, slightly below expectations of the market (2.94 percent) and the government (3 percent). 

On the supply side, record agricultural output in the first three months of the year and a recovery in the services sector from the second quarter contributed to the 2023 result. 

On the demand side, household and government consumption were the main drivers of economic activity, while gross fixed capital formation — the measure of investment in GDP — moved in the opposite direction, falling by 3 percent.

As the head of the International Monetary Fund, Kristalina Georgieva, pointed out this week, during the G20 meeting in Brazil, Latin America’s largest economy has been a source of “good news for the world economy,” as it has consistently exceeded growth projections. 

At the start of 2023, the median market forecast for the country’s GDP was 0.79 percent, according to the Central Bank’s Focus Report. However, the IMF may have been a little too optimistic when it raised its GDP forecast for the country from 3 percent in July to 3.1 percent last October.

Despite a 5.3 percent contraction in the fourth quarter, agriculture grew a whopping 15.1 percent last year. The sector’s boom was driven largely by record harvests of soybeans, corn, and other grains. An increase in production and exports...