The Central Bank raises GDP expectations in 2024 from 2.3% to 3.2%

The Central Bank (BC) raised its forecast for GDP growth in 2024 from 2.3% to 3.2%. The information is taken from the central bank’s quarterly inflation report on Thursday 26.

Household consumption and productive investments were mainly responsible for the change in the leading indicator of the economy. The report highlights that increases in household consumption, investments and more cyclical economic sectors have already been recorded in the previous quarters of this year.

According to the report, GDP growth in the second quarter of 2024 surprised positively. “Brazilian economic activity continues to show dynamism, leading to a new round of upward revisions to growth forecasts for this year.”

The “strong” growth of the economy in the second quarter of 2024 contributed to the positive indicator, according to the Monetary Authority. “The 3.3% increase in GDP compared to the second quarter of 2023 significantly exceeded expectations in effect at the time of the previous report, when the median forecast in the Fox report was 1.6%.”

Economic inflation

Inflation expectations for this year are on the rise, according to a British Columbia report. It fell from 3.96% in the last report to 4.31%, lower than the 4.37% that Fox expected. The increase, according to British Columbia, is due to the impact of the climate crisis, which has made agricultural products and industrial goods more expensive.

The difficulties imposed by drought on production in several regions of the country are expected to lead to continued inflationary pressures. According to the report, drought “may delay the planting of the summer crop, which harms the timely planting of the winter crop.”

Furthermore, the dry and hot climate contributes to higher energy tariffs, which affects inflation, according to the BBC. Substandard rainfall and rising temperatures also threaten higher energy tariffs, the report says.