BUENOS AIRES, June 3 Reuters Brazil39;s economy is forecast to have picked up pace in the first quarter of the year, a Reuters poll showed, driven by an increase in federal outlays that added to stronger household spending and private investment.

The acceleration would mark a noticeable improvement over the second half of 2023, when the economy stalled as consumption and capital spending lagged under the effect of very high interest rates, which have since been lowered.

Gross domestic product GDP is forecast to have increased 0.8 in the JanuaryMarch period compared with the final three months of last year, according to the median estimate of 25 economists polled May 29June 3.

Compared to the first quarter of 2023, Latin America39;s biggest economy is expected to have grown 2.2, with estimates in a 1.12.8 range. The data will be released on Tuesday.

Spending was supported in the period by a relatively healthy job market, as well as the positive impact of courtmandated compensation payments, and rising social benefits from President Luiz Inacio Lula da Silva39;s government.

Morgan Stanley analysts wrote in a report they expected an expansion pushed by private consumption, a product of the sharp fiscal impulse implemented late last year, due to the debt claim payments.

Meanwhile, investment is forecast to reflect some improvement following a drop in foreign direct flows in 2023. But net international transactions likely subtracted from GDP, with growing deficits in…