Brazil's Q3 GDP reduces 2015 GDP forecast by 0.3pp

Brazil Q3 GDP came at -1.7% q/q sa, lower than the market consensus expectations of -1.2% qoq sa. Q1 15 real GDP was revised down to -0.8% q/q sa, while Q2 15 was revised to -2.1% from -1.9% previously. 

Household consumption mainly impacted this slide, which showed 2.4% contraction in Q2, and 2.1% in Q1. The real GDP shows a 2.5% yoy contraction during H1 2015.

"After the release of the Q3 15 real GDP report, we now forecast a 3.8% contraction this year, followed by a 2.8% recession in 2016. The revisions to the historical series shaved 0.3pp off our real GDP forecast for this year and 0.1pp for the next one", says Barclays in a research note. 

On One hand, the household consumption came more contained than predicted, due to fixed investment as well as from the contributions from net exports.

After a increase of 3.1% in Q2, exports actually contracted 1.8% q/q sa during Q3 15, while imports continued to move down, by 6.9% q/q sa, from a 8.0% drop in Q2. With that, the contribution of the external sector came shorter than expected.

"The downward surprise in Q3 reduces our estimates by another 0.1pp this year and for 2016; we lower the growth profile for Q4 15 and Q1 16, resulting in a cumulative effect for our GDP forecasts of 0.6pp this year and 1.1pp in 2016.