Brazilian Growth Forecast Raised To 2.3% In 2023 On Positive Q223 Data

• Fitch Solutions now expects 2.3% real GDP growth in Brazil in 2023, up from the 1.7% previously, putting them slightly above the Bloomberg consensus of 2.1%.
• In the last forecast for Brazil, coming on the heels of a hot growth print for Q123, Fitch noted that risks to its growth forecast were clearly to the upside, as economic data in Q2 was also looking solid, as strong private consumption and robust exports continue to fuel growth.
• Data has continued to look good in the weeks since, underlined by 3.3% y-o-y growth in economic activity in April (0.6% m-o-m, seasonally adjusted). This suggests that Fitch’s forecast for the quarter (previously 1.2%, since revised to 2.2%) and the year were too low.
• While the new forecast for 2023 still marks a deceleration from the 2.9% growth in 2022, it nevertheless is a notable improvement from where the agency estimate and consensus stood at the beginning of the year (around 1.0% growth).
• That said, Fitch expects growth to moderate later in 2023 into 2024, forecasting 1.4% growth that year, due to weaker exports and the lingering impact of elevated rates, even as the BCB (Banco Central do Brasil) begins to ease in H223.

(Source: Fitch Solutions)