The cyclical recovery continues, but is still slow

BRAZIL ECONOMICS - Report 03 Dec 2018 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

​The publication of the official GDP figures for the third quarter shows that the cyclical recovery remains in progress, but is still sluggish. Growth in the quarter was 0.8%, after having inched upward by 0.2% in each of the two previous quarters. As is usual in the announcements of third-quarter data, the IBGE carried out a revision of the National Accounts: a) adjusting the contraction of GDP in 2016 to 3.3% (it previously was estimated at 3.5%); and b) slightly raising (from 1.0% to 1.1%) the growth in 2017. With these changes, the current economic cycle is no longer (by a tiny margin) the deepest of all (the deepest recession was that in 1981), but it is still the longest episode measured, with the economy after 18 quarters still 5% below the pre-recession level (Graph 1). The carry over to the yearly growth is 1.1%, and for the economy to grow by 1.5% in 2018, expansion in the fourth quarter will have to be 1.4%, a figure that does not appear possible in light of the available indicators. With these new data, we have raised our estimate of GDP growth in 2018 to 1.3%.

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