Brazilian economic growth surprises

Brazil’s economic growth in the second quarter of the year smashed expectations, according to official figures.

The country’s gross domestic product was up 1.5 per cent quarter-on-quarter, compared to a Reuters poll consensus of 0.9 per cent. Compared with the same period the year before, economic growth was 3.3 per cent (2.5 per cent expected).

Analysts at JP Morgan had expected to see just 0.3 per cent quarterly growth, having lowered it from 1.5 per cent after weaker-than-expected expansion in the first three months of the year.

Quarterly expansion was driven primarily by 3.9 per cent growth in agriculture, while industry grew by 2.0 per cent and services 0.8 per cent. Compared with the second quarter of 2012, agriculture grew by 13.0 per cent, industry 2.8 per cent and services 2.4 per cent.

Also notable was 3.8 per cent quarter-on-quarter growth in construction, 1.7 per cent growth in trade, 1.7 per cent in manufacturing, and 1.1 per cent growth in financial intermediation and insurance.

Earlier this month, the Brazilian government reduced its full year 2013 growth forecast to 2.5 per cent from four per cent. Other analysts have also cut their estimates, and forecasts range from around 2.0 to 2.2 per cent.

It also forecast four per cent growth and a target primary public sector surplus of 2.1 per cent in 2014. Finance minister Guido Mantega said at the time that the forecast was ambitious and long-range, but that the figures would be revised again at the beginning of 2014.