The Unbearable Lightness of GDP

BRAZIL ECONOMICS - Report 04 Sep 2024 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

Once again, GDP has surprised on the upside, recording a seasonally adjusted expansion of 1.4% (against 0.9% expected) in the second quarter of the year compared to the first quarter, which was revised from 0.8% to 1.0%. Compared to the second quarter of 2023, GDP grew by 3.3%, also surpassing the median projection of 2.7%.

As a result, the carryover for the year now stands at 2.5%, which is likely to prompt considerable revisions to the annual projection, which, according to the Focus survey, was close to 2.5% last week. Even if the average expansion in the second half of the year slows down considerably, annual growth is expected to approach 3.0% in 2024, similar to the levels recorded in 2022 and 2023.

That said, it is clear to us that the pace of expansion far exceeds the country’s potential growth. In the first half of the year, annualized growth reached 4.7%, corresponding to an increase of nearly 3% over the same period last year.

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