Brazil’s 2013 GDP and fourth quarter growth surprised to the upside on Thursday, wiping out rumors of a technical recession.

Fourth growth growth came in at 0.7% compared to the same period last year and GDP ended the year at 2.3%, up from previous estimates of 2%.

“Brazil avoided a technical recession, but I don’t see things picking up yet,” says Craig Botham, an emerging markets economist at Schroders Schroders, a $415 billion asset management firm in London.  Botham’s baseline scenario is for 1.8% GDP growth this year.  That’s due to a mix of factors, China being one of them.  The European Union could conceivably pick up demand to make up for some of China’s slack going forward, but the main problem in Brazil right now is the domestic economy.

“We have budget cuts coming, and tighter monetary policy still to contend with,” Botham says. Brazil’s Central Bank raised interest rates to 10.75% last night.  A drought early in the year will also hurt the country’s all important farming sector. The country is the second largest soybean exporter after the United States.  And Brazil’s consumers have higher debts and higher interests rates that have economists like Botham forecasting less spending.

Even FIFA World Cup soccer coming to town in June, a narrative that once had investors bullish on Latin America’s biggest economy, is no longer a reason to feel bullish on Brazil.

“FIFA wont have a huge impact on GDP.  It will have some impact, but much less than people expect,” Botham says.

Growth in the fourth quarter was mainly due to the services sector, which saw quarterly growth of 0.7%. Agriculture was flat and industrial production dropped by 0.2% as expected.  The Brazilian Institute for Geography and Statistics, or IBGE, said the country recorded a 0.9% drop in manufacturing output, a 0.1% decline in mining and no growth at all in construction. Oddly, this in a country that is supposed to be building roads, power plants and infrastructure for FIFA and the 2016 Summer Olympics in Rio de Janeiro.

Thanks to runaway inflation, now a bit more under control, Brazilian companies have been slow to invest.

Still, it’s not like Brazilian companies have given up.  Public and private companies increased investments by 6.3% last year.

Thursday’s surprising GDP numbers were due primarily to exports which got a boost from a much weaker currency. The Brazilian real is down 19.25% in comparison to the dollar over the last 12 months.

Despite slowdowns in China and Europe, Brazil’s top two trading partners, Brazil is still finding a home for its commodities and manufactured goods.  It exported $2.17 billion worth of goods to China in January compared to $1.7 billion in January of 2013. Last year’s total exports to China hit a record breaking $46 billion. Even iron ore shipments to China have risen both in price and in tonnage.  Brazil shipped over $1.28 billion worth of iron ore to China in January compared to $1.05 billion in January 2013.

Exports to the European Union have slipped somewhat, with January bringing in $3 billion compared with the $3.1 billion last January. Moreover, E.U. shipments have declined in value over three years. Last year Brazil sold $47.7 billion worth of goods to the E.U., down from $49 billion in 2012 and $53.1 billion in 2011.

A stronger E.U. will be good for Brazil, providing China does not retreat.

Closer to home, economists expect monetary tightening in Brazil to be drawing to an end.  The effect of rising interest rates, however, will be felt in Brazil for most of the year.

Lower rates could get companies investing in growth again.

“I don’t think you’ll see investments really pick up until after the elections,” says Botham.  Brazilians go to the polls in October.

By then, things might have turned the corner as investors get in early on a better 2015.