In the third quarter of this year, the growth in investment and household consumption in Brazil has positioned the country's economy among the fastest-growing in this period in 2024. According to data released on Tuesday (3) by the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese), the country's Gross Domestic Product (GDP) increased by 0.9% in three months. The percentage is the same as in China for the period.
“The growth rate is very good. A little above expectations, mainly because agribusiness hasn't been growing as much due to the effects of the climate crisis,” said Weslley Cantelmo, an economist and president of the Institute of Economics and Planning. “Brazil has been moving, surpassing average growth in the period.”
Among the countries that make up the so-called G20, the group of the 20 most important economies on the planet, Brazil is only behind Indonesia (1.2%), India (1.1%) and Mexico (1.1%) for the period analyzed.
The United States economy, for example, grew by 0.7%.
The percentages are compared with GDP recorded from April to June and the same indicator from July to September this year.
In the last 12 months, according to IBGE, national GDP grew by 4%. In the three months ending in September, it reached BRL 3 trillion.
According to Mauricio Weiss, an economist and professor at the Federal University of Rio Grande do Sul (UFRGS, in Portuguese), at this rate, the Brazilian economy is likely to end the year growing by around 3.5%.
Brazil wouldn't be at the top of the world growth ranking, but it would still be advancing more than the average of the countries and more than expected, the expert argued. “In the annual comparison, we won't exactly be in the same position, but we'll be doing well,” he added.
Sustained growth
This growth in the Brazilian economy, both in the third quarter and over the last 12 months, has mainly to do with the increase in investment in the country and household consumption, according to IBGE data.
Investment alone, measured by gross fixed capital formation (GFCF), grew by 10.8% in the third quarter of 2024 compared to the same period in 2023. That's 2.1% growth in the last three months alone.
“This is known as sustained growth: keeping the economy afloat for long enough to start private investment due to strong demand,” said economist Pedro Faria.
“This, in the short term, increases the country's productive capacity,” added Weiss. “There is investment in machinery, as seen when you look at machinery imports. These are very important signs that show not only a good pace of economic growth but also better-quality growth.”
Household consumption increased by 5.5% in 12 months and 1.5% in one year. Cantelmo pointed out that this has to do with the government's public policies aimed at the low-income population.
The expert also warned of the negative impact benefit reductions provided for in the spending cuts package could have on the economy in the future.
“What has held back the economy's growth is consumption and this has to do with some very important public policies,” he said, citing the increase in the minimum wage and the payment of the Continuous Cash Benefit, both of which will be changed according to the fiscal adjustment package.
“This spending cut could seriously impact the growth dynamic next year,” Cantelmo highlighted.
