Market increases projections for 2022 GDP with better-than-expected 2nd quarter

banks and analysis houses revised this Thursday (1st) their projections for the Gross Domestic Product (GDP ) of Brazil in 2022 after the second quarter result came above expectations.

To CNN Brasil Business experts highlighted positive surprises in the services and industry, in addition to highlighting the growth of investments, which would make room for revisions .

Genial Investimentos raised its forecast to 2.8% growth compared to the previous 2.5%, citing the service sector as highlights, with the normalization of on-site activities, family consumption, reflecting fiscal stimulus and a labor market more robust, and the industrial sector .

“Our assessment is that the 2nd quarter GDP was positive, not only because of the above-expected value, but also because of the dissemination of positive results among several subgroups”, says Genial in a report.

already the bank of america raised its growth forecast from 2.5% to 3.25%, maintaining a high expectation of 0.9% in 2023.

The bank highlighted that “activity started 2022 at a strong pace, despite the initial negative impact of the wave[da variante] Ômicron, and maintained its performance throughout the second quarter, with even more impressive numbers. The main highlight was the resilience of the services sector, with positive surprises during the first half”.

The report also states that private consumption has benefited from tax incentives and exemptions, and that in the next semester there will be a “great positive influence” from the reduction of the ICMS on fuels and the increase in Brazil aid .

“The downward impact of the global slowdown is a downside risk for the second half, as are the lagged effects of monetary policy tightening,” the institution warns.

Inter also revised its GDP forecast upward, now expecting a 2.6% rise. “GDP surprised again with higher-than-expected growth. In the annual comparison, the high was 3.2%. The highlight in the quarter was the 4.8% growth in investments, driven by construction”.

For the Goldman Sachs the Brazilian economy performed well in the first half even with tighter financial conditions and the acceleration of inflation , with “particularly robust” activity in the services sector and a resilience to growth. The forecast was revised from 2.2% to 2.9%, with growth close to 1% in 2023.

“We expect some of the service sectors still impacted by Covid (in particular services for families) to recover further in the coming months, supported in part by renewed stimulus,” the bank says, citing tax cuts.

“However, going forward, high inflation, the lagged impact of recent monetary and financial tightening, tighter credit conditions, high household indebtedness, global economic slowdown and post-election political uncertainty will likely add
headwinds to economic activity,” he says in a report.

Also in a report, ABC bank raised its GDP forecast to 2.8%, up from 2.2% previously, with an expectation of a 0.7% increase in 2023.

“In this second semester, we will still have remaining fiscal stimuli and a marginal improvement in labor market data (consumption), while the effect of more restrictive real interest rates will begin to weigh on the other side”, evaluates the institution.

Órama revised its forecast from 2.2% to 2.7%, while Ativa Investimentos announced a revision for 2022 GDP growth from 1% to 2%, citing “more positive data from the first half”.

Eleven said it now expects growth of 3%, compared to the previous 2%, “in line with the positive release of the 2Q22 national accounts, which left a carry-over of 2.6% for the year. Highlight for the industry, which showed acceleration after relief in global problems of logistics, and services, which will continue to benefit from the distribution of aid in the second half of the year”.

Banco MUFG revised its forecast from 1.7% to 2.7%, noting, however, that it expects a contraction in the fourth quarter “once
the impact of these stimuli [fiscais] will be smaller and the economy will feel more strongly the impacts of the monetary tightening”.

Suno and XP Investimentos also announced that they must revise their expectations for this year’s GDP, but have not yet released the new figures.

In a report, XP highlighted that “Brazilian economic activity grew strongly in the last two quarters, with emphasis on the solid increase in domestic demand. Our forecast for GDP growth in 2022, currently at 2.2%, has a clear upward bias.”

The institution also sees a positive bias towards the forecast of a 0.5% increase in 2023, “despite the monetary policy in broadly contractionary territory and the weakening of the global economy”.