The Central Bank’s economic activity index (IBC-Br), considered a reliable bellwether for the economy, broke a three-month skid in November and posted a slight increase of 0.01 percent. The result was below market expectations. The London Stock Exchange Group, for example, had forecast a 0.1 percent increase.
In the rolling quarter ending in November, the activity index fell 0.49 percent from the previous three months, reinforcing forecasts of a slowdown in the Brazilian economy by the end of 2023. Year-to-date, the index is up 2.19 percent.
Signs that the economy has lost momentum can be found in all recent statistics. Industrial production has been flat, dropping 0.1 percent over the past 12 months. The services sector, which accounts for half of Brazil’s formal jobs and about 70 percent of the country’s gross domestic product, contracted for three straight months through October.
Still, recent readings have led economists to revise their forecasts for Q4 2023 GDP results upward, believing that the slowdown won’t be as brutal as initially expected.
The services sector, for example, rose 0.4 percent in November boosted by one-off music events.
At the beginning of January, analysts surveyed by the Central Bank kept their forecast for 2023 GDP at 2.92 percent — this was the last round of forecasts looking at the previous year.
In November, the Finance Ministry revised its forecast from 3.2 percent to 3 percent — the same as the Central Bank’s. Both the government and analysts are more optimistic than international institutions such as the World Bank, which expects Brazil’s GDP to grow by 2.6 percent in 2023.
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