Result driven by strong contribution from agricultural production and statistical carryover from industrial production
Brazilian GDP expanded 1.0% qoq/sa in 1Q17, showing that improved fundamentals (falling interest rates, better corporate balance sheets, higher commodity prices and confidence levels) started to affect the economy.
The result, which breaks a sequence of eight consecutive quarters of contraction, was driven by a strong contribution from agricultural production and favorable statistical carryover from industrial production.
However, these two factors will contribute negatively in 2Q17. Furthermore, weak figures at the margin and uncertainties about the approval of structural reforms may weigh on the result for the current quarter.
Gain of 1.0% after eight consecutive quarters of contraction in economic activity
GDP advanced 1.0% qoq/sa in 1Q17, in line with our estimate and the median of market expectations (1.1% and 1.0%, respectively). Compared to 1Q16, GDP shrank 0.4%. Hence, the change accumulated over four quarters improved to -2.3% from -3.6% in 4Q16.