Big shows held in Brazil, in particular the presence of pop singer Taylor Swift in the country, contributed to a temporary recovery in the services sector in November, after three months of decline. The overall index grew 0.4% compared to October, according to IBGE.
Economists' assessment is that the return of positive behavior in the services sector in November was a positive surprise, but this may not be enough to indicate a reversal in the adjustment trend. Expectations still indicate a decline in this sector in the last quarter of 2023.
This isn't the first time the activity generated by the singer's “The Eras Tour” has been cited in economic research. In July, Taylor Swift's name was mentioned in comments published in the Beige Book, issued by the Federal Reserve Bank of Philadelphia, the city that hosted the shows in May.
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“Taylor Swift's shows have had an impact on cities, bars, hotels and restaurants. The shows boost the economy and have an impact on hotels, airline tickets and transport of people. There is an increase in revenue that goes beyond the organizing company,” Rodrigo Lobo, responsible for IBGE research, said in an interview.
Igor Cadillac, economist at PicPay, also mentioned in his analysis that musical performances were specific factors that helped reduce the impact of the fall in transportation (-1.0%) and information and communication services (-0.1%), which are the most important activities and confirm the structural fragility of the sector.
“In November, there was a huge demand for accommodation, food and other services due to the Taylor Swift and Rebelde concerts.”
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But this slight recovery “does not change the perception of weakness in the services sector in the fourth quarter,” analyzes Carlos Lopez, economist at Banco BV. His forecast is that the sector will face a decline of nearly 1% in the fourth quarter of last year.
For him, the end of 2023 and the beginning of 2024 seems to be the worst time for services. He estimates growth of 2.0% for this year, which would represent a slowdown compared to the 2.2% expected for 2023. But even with this lower forecast, he warns that it will be necessary to accelerate the pace in the coming months.
Itao also expects a decline in the fourth quarter, citing a statistical load of -0.9% in the period.
The bank highlights in its report that services provided to families, in particular, have shown a lot of fluctuations in recent months and that the bank’s daily economic activity index (IDAT-Activity) indicates a slowdown in this type of services.
The analysis of the timing of this category of activity by C6 Bank is similar. The bank indicated that the 2.2% increase in the volume of services provided to families during the month is practically the entire decrease recorded in October. But the sector is still 2.4% below its pre-pandemic level.
Thus, despite the positive number of services in November, C6 Bank estimates that Brazilian GDP should have shown a slight contraction in the fourth quarter of 2023 and ended the year at around 3%. “For 2024, we expect 1.5% growth for the Brazilian economy,” wrote Felipe Salles, the bank’s chief economist. (With Reuters)
“Hardcore beer fanatic. Falls down a lot. Professional coffee fan. Music ninja.”