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08 Dec 2014

Positive GDP growth in Q3

Brazil exited its technical recession from H1 of 2014, with a growth of 0.1% in Q3 vs Q2 of this year. The GDP level in the 3rd Quarter of 2014 is 0.2% below the level in Q3 2013, though.

Growth was driven by an increase in government expenditure and investments - the increase in government expenditure was linked to a small pre-election spending spree by incumbent president Dilma Rousseff.

Private Consumption fell 0.6% in the quarter, which fit the spending pattern we have seen in the 3 quarter, with ordinary Brazilians being very cautious ahead of the election.

Our expectations is that new orthodox economic policy being presented by the new finance minister Levy, will provide a backdrop for firms and consumers to  invest and spend more than in 2014, where both the presidential election at the football world cup have meant that business and investment have put to a side.

The falling commodity prices will affect export negatively, and a high level of consumer debt can provide a drag on consumption in coming quarters, though.