Revision of the growth estimates

BRAZIL ECONOMICS - Report 18 Feb 2019 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

In light of the data released last week, the best estimate is that GDP variation in the fourth quarter of 2018 was nil. With this, our estimate of growth for last year has fallen from 1.3% to 1.1%, and based on this alteration and the latest coinciding indicators, we have to revise our previous growth projection of 2.4% in 2019 downward: although expansion of 2% cannot be totally discarded, this threshold will be hard to surpass on the upside.

In December, real retail sales lost the ground conquered in November, strengthening our perception that the good performance in November was largely due to the Black Friday discounts. The worst-performing segments in December were “other articles for personal and domestic use” and “furniture and appliances”, exactly those aided the most by the Black Friday promotions. In summary, just as in previous years Black Friday anticipated for November sales that before this practice occurred in December. Sales in the augmented concept, which includes vehicles and building materials, grew in the last quarter of 2018 by 0.5%, against 1.8% in the third quarter. With these numbers in hand, we estimate that household consumption decelerated in the last three months of 2018.

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