In May, the Brazilian government revised its growth projection for 2024 to 2.5 percent, despite concerns about inflation at the central bank. According to William Jackson, chief emerging markets economist at Capital Economics, this growth rebound is only temporary and does not indicate a strong recovery.
The flooding in Rio Grande do Sul, one of Brazil’s largest economies, could have a significant impact on growth. While the country’s GDP showed positive growth in the first quarter of 2023, Jackson believes that the floods and other factors could weaken the economy in the second quarter.
Looking ahead, Capital Economics predicts that 2024 growth will be between 1.5-1.8 percent. The strength of agricultural production seen in Q1 may not be sustained due to the potential impact of flooding and other factors on agriculture.
Overall, while Brazil’s economic recovery is showing some positive signs, concerns about inflation and potential impacts on agriculture and other sectors are looming over the country’s future prospects.
