São Paulo – The Brazilian Gross Domestic Product (GDP) was up 0.6% in quarter three this year from the preceding quarter. The result is lower than the market and the government itself expected. The highest growth was seen in agriculture, at 2.5%. Industry grew by 1.1% and services posted a 0% rate. Compared with quarter three 2011, quarter three growth stood 0.9%. The GDP amounted to R$ 1.09 trillion.
The government was expecting the GDP to grow by 1.2% in quarter three, for it believed the lowered Tax on Industrialized Products (IPI) for autos and building materials could boost economic growth. The market was expecting the GDP to be up at least 1%.
Of the countries which comprise the BRICS group, i.e. Brazil, Russia, India, China and South Africa, Brazil had the most timid growth of all. In quarter three this year, Russia grew by 2.9%, India grew by 5.3%, China grew by 7.4%, and South America grew by 2.3%. Still, Brazil grew by a higher rate than France and Germany, whose GDPs were up 0.2% in quarter three. The Brazilian rate, however, was lower than the United States, which saw a 0.7% increase in GDP.
The Brazilian Geography and Statistics Institute (IBGE) revised the GDP growth rate for quarter two this year down from 0.4% to 0.2%. Year-to-date, the Brazilian GDP has grown by 0.7%.
According to IBGE figures, although industry grew by only 1.1% from the preceding quarter, the rate was the highest since quarter two 2010. The processing industry grew the most, at 1.5%, followed by civil construction, which grew by 0.3%. The services sector growth rate was null because even though information services and trade have increased, financial services were down 1.3% from the preceding quarter.
The IBGE national accounts coordination manager, Rebeca Palis, said the financial services sector performance suffered in quarter three due to a record-high insolvency rate, a decline in interests, and banks’ spreads, i.e. the difference between the amount they pay upon raising funds, and the amount they charge in order to loan them. “It was the lowest rate since the 2008 crisis; in quarter four, 2008, the rate was down 2.9%,” she said.
Palis also said that even though agriculture was up 2.5% in quarter three from quarter two, and was the best performing of the three economic activity sectors, it accounts for but 6% of the Brazilian GDP. Agriculture was up 3.6% compared with quarter two this year.
*Translated by Gabriel Pomerancblum
