Brazil's fourth-quarter economic growth forecast to have slowed: Reuters poll

By Gabriel Burin

BUENOS AIRES (Reuters) - Brazil's economy is forecast to have moderated in the final quarter of last year due to slower growth in private consumption and investment, a Reuters poll showed.

The economy expanded by 0.5% in October-December over the previous three-month period, according to the median estimate of 21 economists polled February 26-March 3. The yearly rate was estimated at 4.1%.

A 0.5% rise would imply a deceleration from 0.9% in the third quarter. "This step down was... led by slower (private) consumption and the first decline in investment in over a year," J.P. Morgan analysts wrote in a report.

"Solid government consumption, a slightly positive contribution from net exports, and inventories should have contributed to a positive growth rate at the end of last year."

The flip side of Latin America's No.1 economy's reliance on federal spending is increased fiscal worries, which have led to a selloff on the markets.

At the same time, foreign direct investment increased less than the current account deficit last year, limiting Brazil's economic expansion.

On the supply side, LCA 4intelligence economist Bruno Imazumi said he projected quarterly rises of 0.4% in services, 0.1% in industry and 1.8% in agriculture.

"Within services, we will see a still strong number for financial intermediation, insurance, supplementary pension and related services subsector," he added.

Overall, gross domestic product data to be released on Friday will probably confirm economic growth closed 2024 well above weaker initial market estimates.

Analysts had already upgraded their forecasts throughout last year to account for a solid job market and increased social spending, which countered the negative effect of high interest rates.

In January, the latest consensus estimate of a Reuters poll pointed to annual growth of 3.4% for 2024, more than double the 1.6% rate seen at the start of last year.

For 2025, Brazil's government cut its forecast to 2.3% last month as the central bank continued its monetary tightening cycle. The economic team also lifted inflation projections.

Still, a senior government official said last week the administration would not take exceptional measures to boost growth, and reaffirmed its commitment to Brazil's fiscal framework.

(Reporting and polling by Gabriel Burin; editing by Barbara Lewis)