Brazil economic growth stays strong, supported by farm output, investments
BRASILIA, May 30 (Reuters) - Brazil's economy posted robust growth in the first quarter despite climbing interest rates as fixed investments, household consumption and strong farm output underpinned activity, pushing inflation to a two-year high.
Gross domestic product in Latin America's largest economy rose 1.4% in the January-to-March period from the previous quarter, government statistics agency IBGE said on Friday, in line with the growth forecast in a Reuters poll of economists.
GDP expanded 2.9% from a year earlier, below expectations for a 3.2% increase.
On the supply side, agriculture stood out with a 12.2% gain from the previous quarter, fueled by a bumper soybean harvest.
Services, which make up roughly 70% of Brazil's economy, expanded 0.3% amid a tight labor market, while industrial output slipped 0.1%.
On the demand side, investments measured by gross fixed capital formation stood out with a 3.1% rise from the prior quarter.
Household consumption also contributed with 1.0% growth, supported by measures from leftist President Luiz Inacio Lula da Silva to boost disposable income, including a minimum wage hike. Government spending increased by 0.1%.
The strong economic performance came despite the central bank's aggressive monetary tightening, which has raised the benchmark Selic interest rate by 425 basis points since September, to a nearly 20-year high of 14.75%.
The government expects soaring interest rates to weigh more on economic activity in the second half of the year, projecting GDP growth to slow to 2.4% in 2025 from 3.4% last year.
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The Guardian
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Get all the week's environment news - the good, the bad and the essential after newsletter promotion At the Amazon Summit in Belém two years ago, he declined to sign up to Colombian president Gustavo Petro's calls for a fossil-free rainforest. Soon after, at Cop28 in Dubai, his government shocked many of its supporters by announcing it would join the Opec+ oil cartel. Lula can argue that this is pragmatism as Brazil depends on petroleum sales for a growing share of its GDP. Fossil fuel realpolitik is likely to be evident at a Brics summit in Rio de Janeiro in July, where the Brazilian president will rub shoulders with China's Xi Jinping of China, Russia's Vladimir Putin, India's Narendra Modi and other world leaders. Lula has thrown Marina Silva under a cement mixer once before – in 2008, when she was forced to leave his second-term government because too many ministers saw her as a drag on economic development. 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a day ago
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