The Central Bank's Economic Activity Index exceeds the expectations of the Ministry of Finance, which last week raised its projection for GDP expansion in 2024 from 3.3% to 3.5%, but lowered this year's projection from 2.5% to 2.3%.
Brazilian economic activity closed 2024 with 3.8% growth even after contracting more than expected in December, showing that it lost momentum in the fourth quarter as expected, Central Bank data showed on Monday.
The Central Bank's index of economic activity (IBC-Br), considered a gauge of gross domestic product (GDP), fell 0.7% in December compared to the previous month, in seasonally adjusted data. The result was much worse than the Reuters poll's expectation of a 0.4% drop.
This was the weakest monthly result since May 2023 (-1.72%), which led the index to close the fourth quarter stagnant compared to the previous three months, in seasonally adjusted data.
Compared to December of the previous year, the IBC-Br increased by 2.4%, according to observed figures.
The expectation was for a gradual slowdown in the economy at the end of last year after surprising in the first quarters, in the midst of the monetary adjustment cycle carried out by the Central Bank, with interest rates at a restrictive level.
The final month of last year confirmed this view, with weakness in the industrial, retail and services sectors, although all accumulated gains.
The IBGE will publish GDP data for the fourth quarter and for 2024 on March 7. Analysts expect activity to continue at a more moderate pace in 2025, after the BC already raised the Selic base interest rate to 13.25%, with a further increase already indicated.
Late last week, the Ministry of Finance raised its projection for GDP growth in 2024 from 3.3% to 3.5%, but lowered the expectation for this year from 2.5% to 2.3%.
Focus research conducted by the Central Bank shows that the market expects GDP growth in 2024 to be 3.5%, rising to 2.01% in 2025.
The IBC-Br is constructed based on approximations that represent the production volume indices of agriculture, industry and the service sector, in addition to the volume index of taxes on production.
