Economic activity grows 2.41% in the first quarter, informs BC

Brazilian economic activity showed growth in the first quarter of this year, according to information released this Friday (19) by the Central Bank (BC). The Central Bank Economic Activity Index (IBC-Br) increased by 2.41% from January to March compared to the previous quarter (October to December 2022), according to seasonally adjusted data (adjusted for the period).

Compared to the quarter from January to March 2022, the increase was 3.87% (without adjustment for the period, since the comparison is between equal months).

In March 2023, the IBC-Br fell by 0.15%, reaching 147.09 points. Compared to the same month of 2022, there was growth of 5.46% (also without adjustment for the period). Since August last year, the IBC-Br has been falling, with an interruption of the retraction in December, when there was a rise, followed by stability in January, a rise in February and, now, a new fall.

Accumulated in 12 months, the indicator was positive at 3.31%.

The IBC-Br is a way of assessing the evolution of the country’s economic activity and helps the BC to make decisions about the basic interest rate, the Selic, currently set at 13.75% per year, the highest level since January 2017 , when he was also at that level. The index incorporates information on the activity level of sectors of the economy – industry, commerce and services and agriculture –, in addition to the volume of taxes.

When the Copom raises the basic interest rate, the purpose is to contain the heated demand, and this affects prices because higher interest rates make credit more expensive and stimulate savings. Thus, higher rates help to reduce inflation, but can also hinder the expansion of the economy. Even so, the IBC-Br result for the quarter points to a recovery in activity.

The official indicator of the Brazilian economy, however, is the Gross Domestic Product (GDP), calculated by the Brazilian Institute of Geography and Statistics (IBGE). With a quarterly result, the value for the first quarter of 2023 will be released on June 1st. GDP is the sum of all final goods and services produced by a country.

In 2022, or Brazil’s GDP grew 2.9%, totaling R$ 9.9 trillion.