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LatinNews Daily - 02 June 2021

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In brief: Brazil’s Q1 GDP surprises positively

* Brazil’s national statistics institute (Ibge) has released the latest GDP figures, which show that the Brazilian economy grew 1.2% in the first quarter of this year, compared with Q4 2020. In year-on-year terms, Q1 GDP grew 1%. With this result, which exceeded economists’ expectations, Brazil’s GDP has returned to the levels of Q4 2019, prior to the coronavirus (Covid-19) pandemic which caused the economy to contract by 4.1% in 2020. This strong performance was driven by the agricultural sector, which grew 5.2% year-on-year, and gross fixed capital formation (investment), which expanded 17% year-on-year. The industrial sector also saw year-on-year growth of 3%, while the services sector (which accounts for three-quarters of Brazil’s GDP) contracted 0.8%. Meanwhile, household consumption and government spending fell in both quarterly (-0.1% and -0.8%) and year-on-year (-1.7% and -4.9%) terms. These results have buoyed economic forecasts for the year, with for example investment bank Goldman Sachs revising up its 2021 GDP projection for Brazil from 4.6% to 5.5% on the back of the Q1 figures.