BRASILIA (Reuters) -Brazil’s economy surprised to the upside in the second quarter as the strength of its services and industry sectors offset the impacts of deadly floods in a southern state, bolstering expectations for a solid full-year performance.
The country’s gross domestic product (GDP) expanded 1.4% in the three months through June 30 on a sequential basis, accelerating from the revised 1.0% growth recorded in the first quarter, statistics agency IBGE said on Tuesday.
The quarter-on-quarter performance was above the 0.9% increase expected in a Reuters poll of economists. Year-on-year growth reached 3.3%, surpassing the 2.7% increase projected in the poll.
On the supply side, the main contribution came from the industrial sector, which expanded 1.8% from the previous quarter.
The services sector, the driving force behind Latin America’s largest economy, also made its contribution with a 1.0% increase from the first quarter. The farm sector, on the other hand, decreased 2.3%.
On the demand side, fixed business investment increased by 2.1%, while household consumption – buoyed by a strong labor market – rose 1.3%, the same growth rate recorded by government spending.
Finance Minister Fernando Haddad has been saying the government is likely to revise its full-year economic growth forecast upwards from the current 2.5%, which it had kept unchanged in July.
In May, unprecedented floods that devastated Rio Grande do Sul state, killing more than 180 people and displacing hundreds of thousands, prompted a series of federal government aid measures totaling more than 27 billion reais ($4.8 billion).
Many economists believe this assistance mitigated the expected losses from the disaster.
($1 = 5.6146 reais)