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ECONOMY
GDP grows 1.4% in 2nd quarter, driven by industry, services
GDP is the sum of all goods and services produced by a country. Image: Marcello Casal / Agência Brasil
Brazil’s Gross Domestic Product (GDP) grew 1.4% in the second quarter of 2024 compared to the previous quarter. The results are above the market expectations which projected a variation between 0.7% and 1.2%. The rise in Services (1.0%) and Industry (1.8%) contributed to the positive outcomes while Agriculture and Livestock saw a 2.3% decline during the same period.
Another good news for the economy. The GDP has grown 1.4% in the 2nd quarter of 2024, a 3.3% increase compared to last year. This growth adds to the increase in jobs, household consumption, and better life quality. Straight talk, no lies. That is what matters” — Luiz Inácio Lula da Silva, President of the Republic
Industrial growth is linked to the positive performance of electricity and gas, water, sewage, waste management (4.2%), construction (3.5%) and manufacturing industries (1.8%).
In Services, there were increases in financial activities, insurance, and related services (2.0%), Information and communication (1.7%), Trade (1.4%), Transportation, storage, and postal services (1.3%), Administration, defense, public health and education, and social security (1.0%), Real estate activities (0.9%), and Other service activities (0.8%).
From the perspective of demand, there were price level increases in three components: household and government consumption grew at the same rate (1.3%) and fixed capital formation increased by 2.1%. In current values, the GDP totaled BRL 2.9 trillion [approximately USD 580 billion] in the quarter, an advance of 3.3% compared with the 2nd quarter of 2023. The period saw an increase in Industry (3.9%) and Services (3.5%) and a decrease in Agriculture and Livestock (-2.9%).
REPERCUSION - President Luiz Inácio Lula da Silva referred to the GDP announcement in a social media post. “Another good news for the economy. The GDP has grown 1.4% in the 2nd quarter of 2024, a 3.3% increase compared to last year. This growth adds to increases in jobs, household consumption and better life quality. Straight talk, no lies. That is what matters,” stated Lula.
HIGHLIGHTS - Vice President and Minister of Development, Industry, Trade, and Services Geraldo Alckmin underscored that the GDP growth indicator brings good news for the country. "The market expected 0.9% and it grew 1.4%. Brazil had the third-largest growth among the G20 countries. And the third good news refers to the quality of this growth. The industry saw a strong growth of 1.8%, and investments increased by 2.1%. This is positive news for both Brazil and its people," summarized Alckmin.
PROJECTION - Minister of Finance Fernando Haddad stated that the results align with the projections of the ministry’s Secretariat for Economic Policy, which had forecasted a 1.35% growth. “We will likely revise our GDP growth forecast for next year. Given the current momentum, it could exceed 2.7% or 2.8%, and some institutions are already predicting a growth rate of over 3%,” declared Haddad, highlighting the significance of the industry’s recovery. “Industry has come back strong; gross fixed capital formation was above estimates, which means more investment. We must focus on investment because it is what will ensure growth with low inflation rates,” explained Haddad.
Industry has come back strong; gross fixed capital formation was above estimates, which means more investment. We must focus on investment because it is what will ensure growth with low inflation rates” — Fernando Haddad, Minister of Finance
CONFIDENCE - Minister of Planning and Budget Simone Tebet also celebrated the results on social media. “These results reinforce our expectation for a growth of around 3% in 2024. More jobs, higher income levels, and controlled inflation. Brazil is investing more and companies are confident,” posted the minister.
CONSUMPTION - According to Rebeca Palis, National Accounts coordinator at the Brazilian Institute of Geography and Statistics – IBGE, with the decline in the prominence of Agriculture, the Industry stood out during the quarter, as did household consumption. "Unlike in the past when agriculture played a leading role, this quarter the spotlight was on the industrial sector. This shift was largely driven by growth in electricity, water, gas, and sewage services, particularly due to increased residential electricity consumption driven by high temperatures. Additionally, the construction sector saw a boost, influenced by government incentive programs and rising household incomes," she stated.
DEMAND - According to Palis, from the demand perspective, it is worth noting the growth in investments, with the intensity of activity of all its components, such as the production and import of capital goods, software development, and construction. “That and the continued rise in household consumption, obviously driven by favorable labor market conditions, slightly lower interest rates, increased credit availability, especially for families, and government income transfer programs," she stated.