The stronger-than-expected 1.2% q/q rise in Brazilian GDP in Q2 has prompted us to revise up our 2022 GDP growth forecast to an above-consensus 2.5% (previously 2.0%). And the likelihood of a final 25bp rate hike (to 14.00%) in the current tightening cycle has increased. But the economy is likely to soften over the second half of the year and growth in 2023 will probably average a sluggish 0.8%.
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