By Gabriel Burin

BUENOS AIRES (Reuters) – Brazil’s economy kept growing at a solid pace last quarter in comparison with the primary three months of the yr, supported by household expenditure, a Reuters poll predicted.

But higher imports of products and services likely weighed on the country’s growth after surpassing less-dynamic exports at first of 2024 resulting from a robust foreign exchange rate, which has depreciated recently.

Second-quarter gross domestic product figures, scheduled for Tuesday, are forecast to point out a 0.9% expansion versus the January-March period, when the economy advanced 0.8%, in keeping with the median forecast of 18 analysts polled Aug. 28-Sept. 2.

“We estimate the Brazilian economy grew 0.9% on the quarter, 2.7% yearly… likely supported by resilient private consumption benefiting partially from strong labor markets and rising real wages,” Barclays economists wrote in a report.

While public spending contributed with a rise in social profit payments, in addition to aid related to floods in April and May, “on the downside, the external sector was likely a drag for growth resulting from higher imports,” they added.

In a report, Santander analysts saw a 7.8% quarterly rise in imports versus a much lower 1.3% gain in exports. In the primary quarter, imports and exports grew 6.5% and 0.2% respectively, as Brazilians piled into foreign goods and services.

Meanwhile, from the viewpoint of supply, total industrial production, including mining, must have expanded by 1.2%, an advance partly offset by a 2.4% contraction within the smaller farm sector, in keeping with Santander.

On an annual basis, economic growth was seen within the survey at 2.7% within the second quarter, the very best since 3.5% in the identical period of 2023, following the inauguration of President Luiz Inacio Lula da Silva firstly of last yr.

“Brazil’s growth is especially surprising as this economy could grow near 3% for the second consecutive yr, a median rate that outperforms the opposite countries of the region in 2023 and 2024,” J.P. Morgan economists wrote in a report.

“We expect this strength might be prolonged through the third quarter but foresee some deceleration going forward as, for the primary time shortly, each monetary and monetary policies might be restrictive for growth.”

Last week, Lula signalled he would accept a possible rate hike from his central bank chief nominee for 2025-2028. At the identical time, the finance ministry vowed to satisfy its promise of fiscal restraint by year-end.

(Reporting and polling by Gabriel Burin; Editing by Ross Finley and Christina Fincher)