Brazil's economy exceeded expectations in the second quarter, showing resilience despite devastating floods in a southern state. The GDP expanded by 1.4%, driven by robust performances in the services and industry sectors.
Brazil, economy, GDP, growth, services sector, industry sector, floods, southern state
BRASILIA (Multibagger) - Brazil's economy surprised to the upside in the second quarter as the strength of its services and industry sectors offset the impacts of deadly floods in a southern state, bolstering expectations for a solid full-year performance.
The country's gross domestic product (GDP) expanded 1.4% in the three months through June 30 on a sequential basis, accelerating from the revised 1.0% growth recorded in the first quarter, statistics agency IBGE said on Tuesday.
The quarter-on-quarter performance was above the 0.9% increase expected in a Multibagger poll of economists. Year-on-year growth reached 3.3%, surpassing the 2.7% increase projected in the poll.
On the supply side, the main contribution came from the industrial sector, which expanded 1.8% from the previous quarter.
The services sector, the driving force behind Latin America's largest economy, also made its contribution with a 1.0% increase from the first quarter. The farm sector, on the other hand, decreased 2.3%.
On the demand side, fixed business investment increased by 2.1%, while household consumption - buoyed by a strong labor market - rose 1.3%, the same growth rate recorded by government spending.
Finance Minister Fernando Haddad has been saying the government is likely to revise its full-year economic growth forecast upwards from the current 2.5%, which it had kept unchanged in July.
In May, unprecedented floods that devastated Rio Grande do Sul state, killing more than 180 people and displacing hundreds of thousands, prompted a series of federal government aid measures totaling more than 27 billion reais ($4.8 billion).
Many economists believe this assistance mitigated the expected losses from the disaster.
($1 = 5.6146 reais)
In conclusion, Brazil's economy showed resilience and growth in the face of challenges, with the services and industry sectors leading the way. The increase in GDP, business investment, and consumer spending are positive indicators for a strong full-year performance. The government's decision to revise its economic growth forecast upwards further boosts confidence in Brazil's economic outlook. Despite the impact of devastating floods, the country's economy is proving to be resilient and on a path to recovery.