BRASILIA (Reuters) - Brazil's economy exceeded expectations in the second quarter, with the services and industry sectors driving growth despite challenges from deadly floods. This positive performance is boosting confidence in a solid full-year outlook.
The country's gross domestic product (GDP) expanded by 1.4% in the three months ending on June 30, surpassing the 1.0% growth in the previous quarter. This growth exceeded the 0.9% forecasted by economists in a Reuters poll. Year-on-year growth also exceeded expectations, reaching 3.3% compared to the projected 2.7%.
The industrial sector led the way with a 1.8% expansion, while the services sector, a key driver of the economy, saw a 1.0% increase. However, the farm sector experienced a 2.3% decline.
On the demand side, fixed business investment rose by 2.1%, and household consumption, supported by a strong labor market, increased by 1.3%. Government spending also grew by 1.3%.
Finance Minister Fernando Haddad hinted at a potential upward revision of the full-year economic growth forecast, currently at 2.5%, as the economy continues to show resilience.
In response to devastating floods in May, the government implemented aid measures totaling over 27 billion reais ($4.8 billion), which many economists believe helped mitigate the expected economic losses.
($1 = 5.6146 reais)
Analysis:
The Brazilian economy performed better than expected in the second quarter, driven by strong growth in the industrial and services sectors. Despite challenges from deadly floods, the economy expanded by 1.4% on a quarterly basis and 3.3% year-on-year. This growth was supported by increased business investment, household consumption, and government spending. The government's aid measures in response to the floods also played a crucial role in mitigating economic losses. Overall, this positive economic performance is a promising sign for Brazil's full-year outlook and could have implications for investors and individuals looking to understand the country's economic trajectory.
