No Relief

BRAZIL ECONOMICS - Report 18 Nov 2024 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

Economic activity in the third quarter remained robust, although less dynamic compared to the first half of the year. Our forecasts puts GDP growth close to 0.8% in the third quarter, once again above potential. Consequently, and aligned with a continuously declining unemployment rate, we expect a tighter output gap compared to the first semester.

Over the medium term, we anticipate growth to slow down due to tighter financial conditions, but we remain attentive to the expansionary effects of fiscal policy on aggregate demand. Regarding the behavior of the output gap, a key driver of future inflation dynamics, we see no signs of relief.

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