Brazilian GDP predictor drops after two positive months

Brazilian GDP predictor drops after two positive months
Photo: Antonio Salaverry/Shutterstock

With the end of the three-month strike by Central Bank workers this week, the bank began publishing a series of indicators that are well overdue. One of these is the Economic Activity Index (IBC-Br), considered to be a reliable GDP predictor, for March and April.

The IBC-Br grew 1.09 percent in March, followed by a 0.44-percent drop in April, ending a two-month positive streak. Between January and April, the index accumulated 1.6-percent growth.

Market analysts overwhelmingly expected a slowdown in the second half of the year — a perception shared even by institutions that have recently improved their forecasts for 2022. 

For the next six months, persistent inflation, high interest rates, stagnant wages, and growing fears of a global recession should negatively impact Brazil’s economic performance. 

The combination of lower entry-level wages, higher prices, and limited access to credit has impacted families’ purchasing power and goes a long way toward explaining another piece of data published by the Central Bank: withdrawals from saving accounts surpassed deposits by BRL 50.5 billion (USD 9.4 billion).