Brazil’s GDP should grow by about 1% in 2023. But this belies wide discrepancies across the country. For example, states such as Mato Grosso do Sul, Goiás and Minas Gerais have been growing at an average of 5% for the past five years, while the traditional engines of growth – particularly São Paulo – have been running at about half that rate.
In May, UBS BB raised its estimates for 2023 GDP growth dramatically – to 1.5% from just 0.4% – based on the continued outperformance of agriculture. Fabio Ramos, lead author of the report, tells Euromoney that manufacturing and services continue to report weak results. The agriculture sector is almost single-handedly driving Brazilian growth: this year’s harvests are expected to be about 15% higher than last year, and the highest annual increase since 2016 after the sector bounced back from drought.
“We weren’t counting on such a huge increase in agriculture,” he says, "but recent data from the central bank has been backed up by the agricultural consultants that I’ve been talking to."
Agriculture has a very large share of GDP in Brazil – at just under 10% when defined narrowly in terms of crop production
Ramos is using central bank figures, but financial institutions analysts have been seeing the same trends within the banking system.
