The 1.4% q/q expansion in Brazil’s GDP was partly driven by a boom in the agricultural sector at the start of the year, which is likely to unwind. But it now looks like the economy is on course to expand by around 2.3% this year (our previous forecast was 1.8%). And the strength of domestic demand shown in the expenditure breakdown suggests that Copom will still consider a final 25bp hike in the cycle.
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