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Brazil economy picks up as shoppers spend more

Brazil’s economy grew 0.8 percent in the first quarter, the government said Tuesday, a rebound boosted by consumer spending which analysts say could put the central bank on guard over inflation.

Brazil’s GDP was up 2.5 percent compared to the first quarter of 2023, said the Brazilian Institute of Statistics (IBGE).

Independent analyst Andre Perfeito noted a 1.5 percent increase in household consumption was a key factor in the first quarter growth, with more Brazilians working after a fall in unemployment.

William Jackson, chief emerging markets economist at Capital Economics, said the pace of growth and consumer spending “will raise (even more) concerns about inflation at the central bank.”

In May, the government raised its growth projection for 2024 to 2.5 percent.

However, it has warned the estimates do not take into account the devastation caused by historic flooding in the southern state of Rio Grande do Sul, one of the country’s largest economies.

Jackson said the growth rebound was “temporary… and doesn’t mark the start of a strong recovery.”

He said indicators pointed to a weaker second quarter, and Capital Economic estimates 2024 growth at 1.5-1.8 percent.

“The floods in Rio Grande do Sul may weigh on growth. And we doubt that the strength of agricultural production in Q1 will be sustained,” Jackson said.

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Via AFP

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