The Brazilian government might be overestimating Latin America’s biggest economy’s performance in Q3 2022, as the Ministry of Economy expects the real GDP growth to accelerate to 3.4% y/y from 3.2% y/y in Q2 2022. The actual figures for Q3 won’t be available until December 1st, but CEIC’s GDP Nowcast model suggests that the Ministry’s forecast might be optimistic. According to our nowcast model, Brazil’s economy will likely expand by 2.1% y/y in Q3, which is a whole 1.3pp lower than the official forecast.

In September, the Q3 2022 GDP nowcast saw the greatest cumulative impact from the automotive sector. Automobile production rose by 19.34% y/y, marking the fourth consecutive month of a growth rate of over 10%. The number of new vehicles registered grew by 25.09% y/y in September, accelerating from the 20.7% y/y in the previous month. These two indicators jointly pushed up the GDP nowcast estimate for Q3 by 0.37pp. On the other hand, lower crude steel production, official reserve assets and sales of construction materials had a minimal impact on the Q3 GDP nowcast.

For Q4 2022, we estimate that Brazil’s GDP will grow by 2.7% y/y, supported by the strong performance of the stock exchange index Ibovespa in October, as well as the robust demand for vehicles and lower core inflation in September.

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