Brazil’s April economic activity rose more than economists forecast, as the central bank signals it will keep rates on hold amid declining confidence.
The seasonally adjusted economic index, a proxy for gross domestic product, rose 0.12 percent in April from the prior month after growing a revised 0.05 percent in March, the central bank said today in a report posted on its website. The median estimate of 28 economists surveyed by Bloomberg was for a 0.06 percent increase.
Activity fell 2.29 percent in April from the year before, compared with a median forecast of a 1.85 percent decline.
President Dilma Rousseff, who is up for re-election in October, has seen economic growth moderate as above-target inflation and falling confidence curb consumption. Even while unemployment hovers near record lows, the economic slowdown has taken a toll on her approval rating as polls show her lead against potential contenders in the October vote narrowing.
The world’s second-largest emerging market grew 0.2 percent during the first quarter, as a 3.6 percent increase in agriculture was offset by a 2.1 percent drop in investment. Gross domestic product expanded at half the pace of the previous quarter.
Industrial production and retail sales in April contracted for the second month in a row. Industrial output fell by 0.3 percent on the month as capital goods production dropped, while retail revenue shrank 0.4 percent on falling supermarket sales.
Central bankers on May 28 kept the benchmark Selic interest rate unchanged at 11 percent after increasing borrowing costs by 375 basis points in nine straight meetings. In the minutes to the meeting released last week, policy makers signaled they will keep Selic unchanged as they await the delayed impact of the tightening cycle.
Annual inflation in May accelerated to 6.37 percent from 6.28 percent the month prior, marking the fastest pace since June. Policy makers target 4.5 percent inflation, plus or minus 2 percentage points.
Soccer fans booed Rousseff last night in Sao Paulo as she watched the national team defeat Croatia in the opening game of the World Cup. Voter support for the incumbent fell to 34 percent in June from 37 percent in May, according to a Datafolha poll that pitted her against other potential candidates. The June 3-5 poll published on Folha de Sao Paulo’s website has a margin of error of two percentage points.