Household consumption rises 0.2% in the first quarter, and investment retreats – 06/01/2023 – Market

Consumption by Brazilian families grew by 0.2% in the first quarter of 2023, compared to the fourth quarter of 2022, according to data released this Thursday (1st) by the IBGE (Brazilian Institute of Geography and Statistics).

The result integrates the calculation of GDP (Gross Domestic Product), which in the first quarter of 2023 grew 1.9% compared to the previous quarter, above expectations.

Household consumption is the main component of GDP from the perspective of demand – that is, spending on goods and services. It accounts for about 60% of the indicator.

In the first quarter, consumption was stimulated by measures such as the return of Bolsa Família. The social program was relaunched by the Luiz Inácio Lula da Silva (PT) government to replace the Auxílio Brasil and with additional payments expected.

The recovery of the labor market, despite recent signs of slowing down, was also pointed out by analysts as a factor impacting consumption.

High interest rates, on the other hand, play against household spending, as loans become more expensive. This situation also affects companies, which have to spend more to finance investments.

This Thursday, the IBGE reported that productive investments in the Brazilian economy, measured by the GFCF (Gross Fixed Capital Formation) indicator, fell by 3.4% in the first quarter of 2023, compared to the fourth quarter of 2022.

GDP from the perspective of demand also includes exports, imports and government consumption. Government consumption increased by 0.3% from January to March.

Exports fell by 0.4% in the first quarter. Imports, on the other hand, fell by 7.1% in the same period.