Brazil and Mexico surprised investors by publishing higher economic growth than was expected this week. This comes as the countries’ economies continue to exhibit signs of strengthening despite being faced with steep interest rates and resilient inflation.
Brazil’s economy grew by 3.3% in February, thereby outpacing the 1.05% rise expected by analysts approached in a Bloomberg survey. Mexico’s economy rose by 1.1% in the first quarter of 2023, higher than the median forecast of 0.8% reported in the survey. Mexico’s economy surged 3.9% higher on an annual basis.
What made these results surprising in the eyes of investors was the fact that both Brazil and Mexico have been maintaining strict monetary policies as of late as they continue to fight lingering inflation. Mexico has also reportedly been benefitting from sustained U.S. demand.
“Major developed markets have been surprisingly resilient so far this year, which may be helping to support exports,” William Jackson, chief emerging markets economist at Capital Economics observed. “Wage growth in Mexico and Brazil has been pretty strong. And in Brazil’s case, the agricultural sector seems to be rebounding.”