Brazil, the twelfth largest economy in the world according to GDP, saw its economic activity increase by a seasonally-adjusted 1.3% in September.
The central bank indicator – IBC-Br index – released on Friday, is regarded a leading indicator of gross domestic product (GDP), showed that the figures came in higher more than the 1.0% forecast in a Reuters poll of economists. It also brings the third-quarter increase to 9.5%.
Economists and analysts reacted to the strong third-quarter rebound by raising Brazil’s third-quarter forecasts.
Credit Suisse’s economists raised their third quarter GDP growth forecast to 9.1% from 7.0%, and their full-year forecast to -4.6% from -4.8%. They said on Friday in a note:
“Today’s result confirmed the expectations of a sharp resumption of the economy in the third quarter due to the partial recovery of supply in the economy and the robust fiscal and monetary packages implemented in at the beginning of the pandemic crisis,”
Meanwhile, Economists at Citi increased their third quarter GDP growth forecast to 7.3% from 6.7%, and revised their 2020 outlook to -5.5% from -5.8%.
Citi wrote on Friday:
“Overall, the main activity indicators (industrial production, civil construction, retail sales, services survey, etc) performed better than our expectations, triggering an upward revision,”
Economic Recovery Gathers Momentum
September’s increase was the fifth consecutive month of rises. However, after a difficult year battling COVID-19, Brazil’s economy is expected to record its largest ever annual decline this year, with the government forecasting a 4.7% drop.
Economy Minister Paulo Guedes was bullish on Friday’s figures saying that the Brazilian economy is in a ‘V-shaped’ recovery and could increase by as much as 4% in 2021.
Guedes also insisted that Brazil, Latin America’s largest economy, will suffer less and will recover more quickly than many other countries in LATAM due to central bank support and government actions.
