As the National Statistics Office announced today, the Brazilian economy grew by a seasonally adjusted 1.2% on the previous quarter in the second quarter of 2010. Economic momentum has thus slowed appreciably. However, after three quarters in which the economy had raced ahead at quarterly rates of more than 2%, from an economic point of view this is to be welcomed given growing evidence of overheating. The slowdown in momentum in the second quarter affected all demand components of gross domestic product, such as private consumption and investment.
Brazil: Economy drops down a gear
The latest economic indicators suggest momentum will slow further in the second half of the year. The purchasing managers’ index for the manufacturing sector slipped to 49.9 points, taking it back below the 50 point expansion threshold. The industrial numbers are also flagging “half speed ahead”: having fallen three months in a row, industrial production in July recorded a relatively modest seasonally-adjusted month-on-month increase of 0.4%. In view of the very positive performance overall in the first half of the year, we have raised our forecast for real GDP growth this year from 6.5% to 7.4%. Even if economic output were to stagnate in the third and fourth quarters, GDP would still record an increase of around 7% in 2010 as a whole.
Gregor Eder
Tel.: 49 / 69 / 2 63 – 5 33 58
e-mail: [email protected]