Brazilian GDP growth accelerates ahead of expectations

Quickview: Brazilian GDP growth accelerates to 1.4% in Q3 amid a pick-up in investment.



Craig Botham
Senior Emerging Markets Economist

Brazilian economic activity accelerated in the third quarter, with yearly growth stronger than expected at 1.4%, from 0.4% previously.

Upward revisions to the second quarter data mean Brazil is on track to beat consensus expectations for 2017 as a whole, and we are encouraged to see a strong pick-up in investment.

Acceleration in growth led by investment

A breakdown of the data on an expenditure basis shows that the acceleration was led by a recovery in investment. On the quarter investment expanded 1.6%, such that the yearly growth rate is now only just negative, at -0.5%. Given a 6.7% annual contraction in the second quarter, this is a huge improvement.

Consumption was also strong, growing 2.2% year-on-year, up from 0.6% previously. One slight downside to this pick-up in consumption is the increase in imports. This is likely to weigh on the current account balance and, over time, could threaten the currency.

A sector breakdown shows a fairly broad-based recovery. Activity did slow in agriculture and mining, but picked up in most other sectors. Manufacturing, construction, retail, and real estate put in strong performances compared to the previous quarter.

Political uncertainty to increase ahead of elections

Overall this is an encouraging set of data, particularly the recovery in investment.

If we have any concerns, they would be that the reliance on consumption for growth is not desirable given the Brazilian consumer’s indebtedness, and the likely impact on the current account. Brazil needs to avoid any fresh build-up of external vulnerabilities.

We also see a risk to investment growth as political uncertainty builds ahead of next year’s elections. The prospect of economic nationalism, or populism, could weigh on the nascent recovery in investment.

Subscribe to our Insights

Visit our preference center, where you can choose which Schroders Insights you would like to receive

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.


Craig Botham
Senior Emerging Markets Economist


Craig Botham
Economic views
Emerging Markets
Follow us

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing.

The website and the content included is intended for US-based financial intermediaries (and their non-US affiliates) on behalf of those of their clients who are both (a) not “US persons” as that term is defined in Rule 902 under the United States Securities Act of 1933, as amended (the “1933 Act”) and (b) “non-United States persons” as that terms is defined in Rule 4.7(a)(vi) under the Commodity Exchange Act of 1936, as amended. None of the funds described herein is registered as an “investment company” as that term is defined in the United States Investment Company Act of 1940, as amended, and shares of the funds described herein have not been and will not be registered under the 1933 Act or the securities laws of any of the states of the United States. The shares may not be offered, sold or delivered directly or indirectly in the United States or for the account or benefit of any “US person.”

The information contained in this website does not constitute an offer to purchase or sell, advertise, recommend, distribute or solicit a subscription for interests in investment products in any Latin American jurisdiction where such would be unauthorized. The information contained in this website is not intended for distribution to the public in general and must not be reproduced or distributed, entirely or partially to any individuals who are not allowed to receive it according to applicable legislation. The investment products and their distribution may not be registered in Latin America, and therefore may not meet certain requirements and procedures usually observed in public offerings of securities registered in the region, with which investors in the Latin America capital markets may be familiar. For this reason, the access of the investors to certain information regarding the investment products may be restricted. Financial intermediaries and Advisors must ensure the information provided in this website is appropriate and suitable to the receiver’s domicile and jurisdiction and according to the applicable legislation.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security/sector/country.

Issued by Schroder Investment Management (Europe) S.A., 5 (“SIM Europe”), rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.

Schroders Capital is the private markets investment division of Schroders plc.  Schroders Capital Management (US) Inc. (“Schroders Capital US”) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).  It provides asset management products and services to clients in the United States and Canada.  For more information, visit

SIM (Europe), SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.