Brazilian GDP falls in the fourth quarter, consolidating the economic slowdown

By Marcela Ayres

BRASILIA, March 2 (Reuters) – Brazil’s economy contracted in the fourth quarter, hit by weakness in industry and consolidating a year-long slowdown, government data showed on Thursday, darkening the outlook for 2023 amid rising borrowing costs.

Brazil’s gross domestic product (GDP) fell 0.2% in the three months to December from the previous quarter, official statistics agency IBGE reported, matching the drop expected in a Reuters poll. from economists.

Latin America’s largest economy recorded a 0.3% contraction in industry during the period, while agriculture and services grew by 0.3% and 0.2%, respectively, said the IBGE.

The Brazilian economy grew by 1.9% in the fourth quarter of 2021, below the forecast of 2.2%.

The country’s GDP grew by 2.9% in 2022, lagging behind the 5% post-pandemic expansion recorded in 2021, but performing much better than initially estimated at the start of the year. last.

The annual performance was helped by the strength of the services sector, which posted an expansion in all the activities studied, as well as the improvement in the labor market and the fiscal stimulus measures of the previous government of President Jair Bolsonaro during his candidacy for re-election.

The election was won by leftist President Luiz Inácio Lula da Silva, who along with ministers and allies stressed that the level of the country’s benchmark interest rate, held at a six-year high of 13 .75% from September to fight inflation, it can stifle the economy and cause disruptions in the credit market.

In 2022, the services sector grew by 4.2% and industry recorded a growth of 1.6%, while agriculture fell by 1.7%, affected by the decline in soybean production , the main crop of Brazil.

(Reporting by Marcela Ayres; Editing in Spanish by Ricardo Figueroa)