Brazil's Economy Surges with 4% Growth in Q3, Led by Consumer Spending

Brazil

Brazil's economy exhibited robust growth in the third quarter of 2024, registering a 4% annual increase, primarily driven by a surge in consumer spending, as per data released by the Brazilian Institute of Geography and Statistics (IBGE). This marks the country's fastest economic growth since the first quarter of 2023.

Sector-Specific Growth Trends

Consumer spending was particularly strong, increasing by 5.5% compared to the same quarter last year, while government expenditure rose by 1.3%. The services sector also saw a notable expansion, growing by 4.1%.

The industrial sector experienced a 3.6% growth year-on-year, fueled by significant advances in civil construction and a peak in automotive production not seen in the past five years, according to the national association of vehicle manufacturers.

However, not all sectors performed equally. The oil, natural gas, and mining industries saw a contraction of 1%, attributed to a decline in oil and gas exploration and production, with the third quarter output dropping to 4.35 million barrels of oil equivalent per day from 4.51 million in the previous quarter, as reported by Brazil's oil and gas regulator ANP.

Challenges and Opportunities

While exports grew modestly by 2.1%, imports surged by 18%, highlighting a robust domestic demand. The utilities sector, encompassing electricity and gas, along with water and sewage management, grew by 3.7% amid higher demand, despite increased power tariffs resulting from a severe drought in the earlier part of the year.

Conversely, the agriculture and cattle raising sector slightly declined by 0.8%, with key crop productions like corn and sugarcane falling due to adverse weather conditions. Nonetheless, there were positive notes as the production of cotton, wheat, and coffee rose by 14.5%, 5.3%, and 0.3%, respectively.

The overall investment rate in Brazil also saw an uptick, reaching 17.6% of the country’s total production, which is an increase of 1.2 percentage points from last year.