Challenging times ahead, here and abroad

Four main forces have shaped the performance of the economy this year and they will continue to do so in 2023: monetary and fiscal policies, geopolitics, and the normalization of health conditions, including families’ decisions on what to do with the savings they built up in the lockdowns. However, the direction and intensity of these forces are likely to change significantly next year, generating different results.

The first half of 2022 was much more favorable for economic activity in Brazil than expected a few months ago. We estimate that in the second quarter, GDP grew 1% compared to the first. That is, it was possible to maintain, in aggregate terms, the same pace of expansion recorded in the first three months of the year. On the supply side, the main highlight has been the robust growth of the service sector. On the demand side, the main highlight has been household consumption. According to our GDP Monitor, around 85% of annualized growth in household consumption can be explained by growth in consumption of services. This result partly reflects services’ high share of Brazilian families

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