Brazilian Economy Contracts for 1st Time in Over 2 Years

The Brazilian economy shrank 0.2 percent on quarter in the first quarter of 2019, slowing from a 0.1 percent expansion in the previous period and in line with market. It was the first contraction since the last quarter of 2016, as household consumption rose at a softer pace and fixed investment continued to shrink while government spending rebounded.

On the expenditure side, household spending increased 0.3 percent, easing from a 0.5 percent expansion in the last quarter of 2018 and gross fixed capital formation continued to decline 1.7 percent (vs -2.4 percent in Q4). Meanwhile, government consumption rose 0.4 percent, rebounding from a 0.3 percent decrease in the prior period. Exports went down -1.9 percent (vs 3.7 percent in Q4) while imports advanced 0.5 percent (vs -6.1 percent in Q4).

On the production side, the industrial sector contracted 0.7 percent, following a 0.3 percent decline in the previous quarter, namely mining (-6.3 percent vs 2 percent in Q4), construction (-2 percent vs -0.1 percent), and utilities (1.4 percent vs 3.7 percent). Meantime, manufacturing was down 0.5 percent, after shrinking 0.9 percent. 

The services sector advanced 0.2 percent, the same as in the fourth quarter of 2018, of which financial services (0.4 percent vs -0.4 percent); internal trade (-0.1 percent vs -0.2 percent); real estate activities  (0.2 percent vs 0.6 percent); information & communication (0.3 percent vs 2 percent) and transportation (-0.6 percent vs -0.3 percent).

Finally, agriculture contracted 0.5 percent, after showing no growth in the prior quarter.

Year-on-year, the gross domestic product advanced 0.5 percent, easing from 1.1 percent in the previous three-month period and matching market expectations. It was the weakest growth rate since the first quarter of 2017.

Brazilian Economy Contracts for 1st Time in Over 2 Years

IBGE | Stefanie Moya |
5/30/2019 12:23:30 PM