Brazilian GDP in the third quarter of 2024 (between July and September) totaled R$3.0 trillion, an increase of 0.9% compared to the previous quarter and 4.0% compared to the same period of the previous year. Since January this year, the Brazilian economy has already accumulated an increase of 3.1%.
Even so, the economy shows signs of slowing down compared to the previous quarter, when the GDP result was +1.4%.
The main drivers of the positive result were, on the demand side, household consumption, totaling R$ 1.9 trillion this quarter and an increase of 5.5% in the period of one year, and, on the supply side, the services, with R$1.8 trillion and an increase of 4.1%.
Gross fixed capital formation – the technical name for investments in machines, production infrastructure, technology, among others – increased 10.8% in the annual comparison, and totaled R$526.8 billion this year. One of the factors that encouraged the advancement of investments in the production of goods is the respite of the Selic, whose fall inspired confidence in the Brazilian economy.
In July 2023, the Selic was at 13.75% per year and, between August 2023 and May 2024, the Central Bank promoted successive cuts until the Selic reached the level of 10.5%. In September this year, in the last month of the quarter analyzed by IBGE, the BC began a new cycle of increasing the basic rate, with an increase of 0.50 pp, currently at 11.25% since the November meeting.
The strong GDP result reinforces the prospect of continued monetary tightening by the Central Bank, at this month’s Copom meeting, in order to contain the risk of inflationary inertia in a market with economic growth and low unemployment.
According to the Brazilian Institute of Geography and Statistics (IBGE), the increase in investments “is justified by the increase in imports of capital goods, the internal production of capital goods, software development and construction”.
Revised upwards
In this release, IBGE also reviewed the growth of the Brazilian economy for the year 2023. From January to December last year, IBGE adjusted the GDP increase to 3.2%, originally 2.9%.
There was a review of the services sector (from 2.4% to 2.8%), industry (from 1.6% to 1.7%) and the agro sector (from 15.1% to 16.3%) .
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Family consumption grew 5.5% in one year
The main driver of the GDP result in the third quarter of 2024 was household consumption, which increased 1.5% compared to the previous period (2nd quarter 2024) and 5.5% compared to the same period a year earlier (3rd quarter 2023), totaling R$1.9 trillion.
Among the factors that contributed to the result, government programs and improvements in the job market stand out.
In total, government spending represented a contribution of R$535 billion to the Brazilian economy in the third quarter of 2024, an increase of 0.8% in the quarterly comparison and 1.3% in the annual comparison. Despite the contribution to the economy, the government’s fiscal result has especially penalized the most volatile financial indicators – such as country risk measures, the exchange rate and the stock market – and generated friction with Congress and the financial market.
Growth in the services sector in one year is 4.1%
Another positive highlight was the services sector, which grew 0.9% in the quarterly comparison and 4.1% in the annual comparison. In particular: expansions in Information and communication (2.1%); Other service activities (1.7%); Financial, insurance and related services activities (1.5%); Real estate activities (1.0%); and Commerce (0.8%).
The services sector is one of the sectors that has been monitored very closely by the Central Bank, as the sustained growth in activity has been one of the factors for the resilience of Brazilian inflation.
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Industry is still capable of surprising
Just behind the services sector is the Brazilian industry, which totaled R$658.6 billion in the third quarter of 2024, an increase of 0.6% in the quarterly comparison and 3.6% in the annual comparison.
Although penalized by high interest rates, the construction industry increased by 5.7%, “corroborated both by the increase in occupancy and the production of typical inputs for this activity”, and the transformation industries increased by 4.3% “influenced by , mainly, for the manufacture of motor vehicles; other transport equipment; furniture and chemicals.”
Agriculture in the off-season
A major highlight of the GDP in 2023, the agricultural sector had a drop of 0.9% in the quarterly comparison and a decline of 0.8% in the annual comparison, totaling R$ 162.9 billion in the third quarter of 2024. Despite the decline, the third quarter tends to penalize agricultural activity as the sector faces off-season periods at this time of year.
(Sérgio Tauhata collaborated)
