Economists improve expectations for Brazil’s Q4 2023 GDP

Recent readings of retail and services data have led economists to revise their forecasts for Q4 2023 GDP results upwards. 

According to the Brazilian Institute of Geography and Statistics, the services sector posted a monthly growth of 0.4 percent in November. In the same month, core retail sales were up by 0.1 percent month-on-month. When factoring in the sales of vehicles, construction materials, and wholesale foodstuffs, the growth reached 1.3 percent.

For many economists, the numbers reduce the risks of negative GDP numbers in Q4 2023 — despite multiple signs of an economic slowdown. 

“While growth rates recorded in November should be viewed with caution, recent data corroborates the scenario of resilience in household consumption expenditure,” brokerage firm XP wrote in a report to clients. 

For Bradesco, a private bank, November results show the retail sector is more dynamic than expected. “Our business research … also suggests strong results for December. With this, we reinforce the scenario of 2.9 percent growth in 2023, driven by family consumption,” the bank said.

Goldman Sachs adds that retail activity should continue to benefit from fiscal stimuli and a solid expansion in real household disposable income.

What may mitigate this projection somewhat are the restrictive internal monetary and financial conditions, in addition to the still high levels of household debt.