Brazil: Economic growth beats expectations for fourth month running in September
Latest reading: The Brazilian economy closed the third quarter on a better-than-expected note: Economic activity increased 0.8% month on month in seasonally adjusted terms in September (August: +0.2% s.a. mom), beating market projections for the fourth consecutive month.
On an annual basis, economic activity rose 5.1% in September, significantly above August’s upwardly revised 3.4% expansion. Accordingly, the trend improved, with the annual average growth of economic activity coming in at an over one-year high of 3.0%, up from August’s 2.6% reading.
Looking at sectoral data, services output—which accounts for roughly 70% of GDP—rebounded in September and tallied a 1.0% month-on-month seasonally adjusted expansion (August: -0.3% s.a. mom), overshooting market expectations.
Similarly, retail sales also returned to growth, rising 0.5% in September (August: -0.2% s.a. mom) while falling notably short of market projections.
Additionally, industrial output growth accelerated to 1.1% in the same month, improving from August’s 0.2% increase.
Outlook: Taken together, July–September data—despite being better than expected—suggests that sequential GDP growth should have slowed from Q2 in Q3, a view shared by our panelists. Looking further ahead, our Consensus is for the economy to slow further in Q4, before picking up in Q1 2025 and roughly stabilizing thereafter. That said, overall in 2025, GDP will rise at a milder pace than in 2024 on still-high inflation and interest rates. Sectorally, a slowdown in industrial and services output should outweigh a rebound in agricultural output.