China's Slower Growth Will Hit Brazil Hard

Data released on Monday show that the Asian country's GDP grew 4.9% from July to September

Signs of a slowdown in the Chinese economy in the third quarter is bad news for countries dependent on commodities (commodities), such as Brazil. Although, given the size of China, global growth should be affected as a whole, the Brazilian economy will be one of the hardest hit, with the consolidation of a scenario of weaker performance in the Asian country in the coming years. China's economy grew at a slower pace in the third quarter due to an energy crisis, disruptions in supply chains, outbreaks of the delta variant of the coronavirus and worsening real estate debt. Data released on Monday (18) show that the Gross Domestic Product of the Asian country grew 4.9% from July to September, the weakest pace since the third quarter of 2020 and decelerating 7.9% in relation to the second trimester.

In the accounts of economists at Itaú Unibanco, for every 1 percentage point drop in China's GDP, the Brazilian GDP has a 0.3 pp retraction. The bank's current projection is that the Chinese economy will grow 5.1% next year (compared to the previous estimate of 5.8%). For Brazil, the expectation is for growth of 0.5% in 2022. "Therefore, if the slowdown persists and China grows 4% in 2022, Brazil will grow only 0.2%", summarizes Luka Barbosa, economist of Itaú Unibanco. He recalls that commodity-exporting countries, such as Brazil, tend to have a big impact on the Chinese slowdown.

Translated by Kiratiana Freelon

Read the article in the original language