(Bloomberg) — Brazil’s economy picked up in the early months of this year, fueled by strong household consumption that helped to propel growth beyond expectations despite the drag of high borrowing costs.
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Official data published Tuesday showed gross domestic product grew 0.8% in January-March period from the previous quarter, above the 0.7% median estimate from analysts in a Bloomberg survey.
After half a year of stagnation, Latin America’s largest economy took off thanks largely to government transfers, which boosted consumers’ spending power. The report is sure to be welcomed by President Luiz Inacio Lula da Silva who promised improve Brazilians’ quality of life but has faced growing frustration over food prices and his government’s response to devastating floods in the south of the country.
Agriculture gained 11.3% on the quarter, though fell short of last year’s record-breaking harvests that helped the economy outstrip analysts’ more pessimistic forecasts at the beginning of 2023.
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While inflation continued to cool during the period, tight monetary policy is taking a toll on the economy and has analysts bracing for more tepid growth moving forward. Further clouding the outlook, the damage from flooding in state of Rio Grande do Sul, a farming powerhouse, is still being tallied up as waters there gradually recede.
–With assistance from Giovanna Serafim.
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