Brazil’s economy expanded by 1.2% in the first quarter, from three months earlier, data showed on Tuesday, as rebounding services and investments took Latin America’s largest economy to its pre-pandemic size at the end of 2019.
It was the third consecutive quarter of growth, and although the rebound has slowed, some underlying figures suggest stronger foundations for a continued recovery this year.
“This makes the outlook for the coming quarters very positive,” said Jason Vieira, chief economist at Infinity Asset Management in Sao Paulo, calling the data “a really good set of numbers, especially fixed business investment.”
The economic recovery has accelerated inflation in Brazil, prompting one of the world’s most aggressive string of ongoing interest rate increases. The central bank has raised its benchmark rate by 75 basis points at each of its last two policy meetings, to 3.50%,and has indicated it will do so again next month as GDP growth holds up and inflationary pressures persist.
Brazil’s first-quarter growth was driven by services, industry and fixed business investment and agriculture grew by 5.7%, its fastest pace in four years.
A clutch of upbeat indicators recently, including record tax collection and formal job growth, has triggered a wave of upward revisions to economists’ full-year GDP growth forecasts.
