The Brazilian economy exceeded expectations in the third quarter of the year, showing a slight growth instead of the anticipated contraction. According to data released by the Brazilian Institute of Geography and Statistics (IBGE), gross domestic product (GDP) increased by 0.1% compared to the previous quarter and was 2.0% higher than the same period last year.
Economists had predicted a shrinkage of 0.3% for the quarter, but the actual figures were more positive. This comes after a robust expansion of 1.0% on the quarter and 3.5% on the year in the second quarter, as per the revised IBGE data.
The growth in the third quarter can be attributed to consumer and government spending, along with a strong performance by the services sector. However, the agriculture sector continued to contract during this period.
The Central Bank of Brazil has been gradually reducing interest rates since last year, and this accommodative monetary policy has played a significant role in supporting economic growth. The benchmark Selic rate currently stands at 12.25%, after three consecutive rate cuts. The Central Bank looks set to continue lowering rates, as it believes inflation is under control and consumers have more purchasing power.
All in all, these positive economic indicators paint a favorable picture for Brazil's largest economy.