Citi has worsened its estimates for the expansion of Brazil’s Gross Domestic Product (GDP) this year and next, after data this Wednesday showed an unexpected drop in retail sales in October.
Now, the US lender expects economic growth of 4.5% in 2021, compared to a previous projection of 4.7%. For 2022, the expectation increased to just 0.3% of GDP, against an expansion of 0.6% previously estimated.
“Retail sales confirm the disappointing performance of activity, triggering downgrades in our growth projections,” Citi said in a report. Earlier, the IBGE informed that the volume of sales in the sector decreased 0.1% in October compared to September, down 7.1% over the same period of the previous year.
The expectation in a Reuters survey of economists was up 0.8% over September and down 5.6% compared to a year earlier.
“Overall, this result of retail sales confirms our concern that GDP may not grow this quarter (after contraction in both the second and third quarters),” said the private bank.
Last week’s data showed that Brazil’s GDP dropped 0.1% between July and September, as the country entered a technical recession.
Citi also cited a recent revision in the historical series of GDP data as justification for the deterioration in its forecast for the performance of economic activity in 2022.
The IBGE informed last week that the economy contracted by 0.4% in the second quarter compared to the previous three months, against a drop of 0.1% previously disclosed.
Reference: CNN Brasil