Nov. 14 (Bloomberg) -- Brazil’s economic activity index in September surprised analysts by contracting, adding to signs that President Dilma Rousseff’s efforts to spur growth are failing.
The seasonally adjusted economic activity index, a proxy for gross domestic product, fell 0.01 percent in September from the previous month after rising a revised 0.09 percent in August, the central bank said today in a report posted on its website. Analysts expected a 0.19 percent gain, according to the median estimate of 37 economists surveyed by Bloomberg.
The index posted a 3.33 percent increase from the year before, lower than the 3.6 percent median estimate from 34 economists.
Rousseff’s administration has been struggling to revive economic growth, as higher public spending, tax breaks and subsidized credit to consumers and companies are being offset by the world’s largest interest rate increase. Above-target inflation has also eroded investor confidence in the economy.
The number today “confirms expectations that GDP growth in the third quarter was close to zero or even negative,” Newton Rosa, chief economist at Sul America Investimentos, said by phone from Sao Paulo. “Actually, it shouldn’t surprise anybody, we’ve been getting used to slow growth for some time.”
Swap rate contracts maturing in January 2015, the most traded in Sao Paulo today, fell five basis points, or 0.05 percentage point, to 10.81 percent at 9:54 a.m. Brasilia time.
The world’s second-largest emerging economy is forecast to grow 2.5 percent this year and 2.11 percent in 2014, the latest weekly central bank survey of economists shows. That would be the fourth consecutive year of growth below the average in Latin America, according to analysts surveyed by Bloomberg.
The central bank has boosted its benchmark Selic rate by 225 basis points since April, to 9.5 percent, as inflation in October was 5.84 percent. The bank targets inflation of 4.5 percent plus or minus two percentage points.
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