On Friday (01/03), the Brazilian Institute of Geography and Statistics announced that Brazil’s economy grew three times the result predicted at the beginning of last year and closed 2023 at R$10.9 trillion. The Gross Domestic Product (GDP) grew by 2.9% driven mainly by the performance of agribusiness, which had record expansion, and family consumption.
This Content Is Only For Subscribers
To unlock this content, subscribe to INTERLIRA Reports.
Three Times Expected
In the first week of January last year, the Focus Bulletin – a report from the Central Bank (BC) that compiles analyst projections – pointed to growth of just 0.78% in 2023. The number rose as more positive data was released. being published throughout the year.
Among the Top 10
With GDP growth of 2.9% last year, Brazil returned to the group of the 10 largest global economies. According to a survey by the risk rating agency Austin Rating, considering GDP at still preliminary values, the Brazilian economy totaled US$ 2.1 trillion. It is the ninth largest on the planet. The United States leads with GDP of US$26 trillion (+2.5%), followed by China (+5.2%) with US$17 trillion and Germany (-0.3%) with US$4.4 trillion.
The Brazilian economy’s growth of 2.9% in 2023 was close to the global average, estimated at 3.1% by the IMF (International Monetary Fund) in its report released in January this year.
Sectors
The super grain harvest was one of the drivers of the economy, alongside services, which account for almost 70% of the economy and were driven by family consumption and agricultural exports. Agriculture grew 15.1% in the year, boosting exports, which increased 9.1%. Another positive influence on the 2023 GDP result was the performance of Extractive Industries. Activity went up by 8.7% due to the increase in the extraction of oil and natural gas and iron ore.
- Agriculture: + 15.1%
- Services: 2.4%
- Industry: + 1.6%
- Family consumption: 3.1%
- Government consumption: + 1.7%
- Investment: -3%
- Imports: -1.2%
- Exports: + 9.1%
Perspectives
With the weather disrupting the 2023/2024 harvest, agriculture will pull the economy down, albeit slightly. In economists’ analysis, domestic demand, with emphasis on family consumption, should be the driving force in 2024.
Payroll exemption
The government published a provisional measure this Tuesday that revokes the return of payroll taxes in 17 labor-intensive sectors. This return had been included in another provisional measure, published in December. The measure generated strong opposition from parliamentarians and entities, which claimed that the decision would generate unemployment and abandon these sectors, negatively affecting the economy.
With the change, the law approved by Congress in 2023 that extended the payroll tax exemption until 2027 comes into force again. The government, however, continues to defend the return of taxation, as it understands that it would help the government to achieve the goal of zero deficit in public accounts – that is, to stop the escalation of public debt and spend, in 2024, only what the government collected. Therefore, he sent a bill on the subject to Congress.
Incentive to National Industry
At the same time, as the government tries to eliminate tax exemptions in the 17 sectors, it proposes reducing taxes with the aim of encouraging the purchase of machinery by the national industry. Vice President Geraldo Alckmin defended this Wednesday (28) the government program that provides for this measure. For him, the initiative can “improve productivity” and make the country’s economy grow. The initiative is in line with the country’s already announced reindustrialization plan.
