Brazil Economic Activity Beats Forecasts in November Despite Monetary Tightening

• Economic activity in Brazil exceeded market expectations in November, official data showed on Thursday, adding to a string of stronger-than-anticipated performances despite the central bank's ongoing monetary tightening cycle. The IBC-Br index, a leading indicator of gross domestic product (GDP), rose 0.1% in seasonally adjusted terms from October, while economists polled by Reuters had expected no change.
• On a non-seasonally adjusted basis, the index - which incorporates proxies for output in agriculture, industry, and services, as well as tax data on production - climbed 4.1% compared to November 2023 and increased 3.6% over 12 months.
• The positive performance came despite weaker-than-expected data in November for the service sector, the main driver of Brazil's economy, along with negative readings for retail sales and industrial output.
• Finance Minister Fernando Haddad has stated that Latin America's largest economy likely expanded by 3.6% in 2024, more than double the forecasts by private economists at the beginning of last year. The expansion has been fueled by strong household consumption and rising investment amid a tight labor market.

(Source: Reuters)