economy should lose steam throughout the year, indicate projections

After the best start to the year since 2010, expectations are that economic activity will take more timid steps from now on. Bradesco, for example, sees a chance of a decline in the Gross Domestic Product (GDP) in this second quarter, after the 1.9% increase in the first quarter. “The slowdown in economic activity in 2023 is a reflection of the lagged effects of the Selic rate”, explain analysts at the bank, who project falls of 0.2% in the second and third quarters and an increase of 0.1% in the fourth.

XP Investimentos also sees an economic slowdown throughout 2023. For this second half, the brokerage sees the possibility of a slight growth of 0.2%. The brokerage observes that the transformation industry shrank for the third consecutive quarter, civil construction also continues to retreat and the service sector shows signs of moderation. “Dissipation of the ‘post-Covid’ impulse, worsening credit conditions and high indebtedness of families and companies have been weighing on domestic demand”, says economist Rodolfo Margato.

Data from the services sector in April, released this Thursday (15) by the IBGE, seem to corroborate this perception. Revenues decreased by 1.6% in the month, frustrating market expectations, which were of relative stability.

Despite this expected loss of momentum, strong growth in the first quarter should guarantee GDP in the blue at the end of 2023. The financial market has revised upwards projections for the year’s result. The median (midpoint) of expectations increased from 1.02%, four weeks ago, to 1.84%, according to the most recent Focus bulletin, from the Central Bank. Institutions such as Bradesco, XP and Itaú appear among the most optimistic, with projections of 2.1%, 2.2% and 2.3%, respectively.