BRASILIA (Reuters) -The Brazilian economy closed the second quarter showing resilience after much stronger-than-expected activity data in June, central bank figures showed on Friday, reinforcing forecasts of a solid year for Latin America’s No.1 economy.
The IBC-Br index, a key predictor of gross domestic product, increased by a seasonally adjusted 1.4% in June from the previous month, beating the 0.5% growth expected by economists in a Reuters poll.
The monthly performance led to a 1.1% expansion in the second quarter compared with the previous three months.
Brazil’s economy has been supported by a strong labor market and booming services sector, which hit an all-time high in June.
Following the latest activity data, Goldman Sachs economist Alberto Ramos said he now expects the country’s GDP to grow 2.5% this year, up from the 2.3% previously forecast. Santander also hiked its projections for Brazil.
“We are impressed by the current strength of Brazil’s economy,” Santander chief economist Ana Paula Vescovi said in a note to clients.
“We now expect an even stronger short-term dynamic, as the labor market remains robust and floods in Rio Grande do Sul had a smaller impact on economic activity than we anticipated,” she added, revising her 2024 GDP growth estimate to 2.3% from 2.0%.
The second quarter’s performance showed resilience despite the severe floods that hit the southernmost state of Rio Grande do Sul in May, devastating cities and displacing more than half a million people.
These events led many economists at the time to predict potential economic losses for the country.
Finance Minister Fernando Haddad said this week that the government would likely revise this year’s expected economic growth forecast upwards to more than 2.5%, after maintaining the estimate at that level in July.
The official gross domestic product (GDP) figures will be released by the statistics agency IBGE on Sept. 3.
(Reporting by Marcela Ayres; Editing by Gabriel Araujo and Jonathan Oatis)
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