Brazil July Economic Activity Drops Less Than Analysts ForecastMatthew Malinowski
Brazil’s economic activity in July declined less than analysts forecast, signaling a continued uneven recovery in the world’s second-biggest emerging market.
The seasonally adjusted economic activity index, a proxy for gross domestic product, fell 0.33 percent in July from the previous month after rising a revised 1.03 percent in June, the central bank said today in a report posted on its website. Analysts expected a 0.6 percent drop, according to the median estimate of 30 economists surveyed by Bloomberg.
The index a posted 3.38 percent rise from the year before, higher than the 2.89 median estimate from 26 economists.
President Dilma Rousseff’s administration has endeavored to spur recovery by lowering tariffs on some imports, boosting subsidized lending and cutting payroll taxes to spur demand. Central bankers have intervened in the currency market to boost a weakening real and lifted the key rate in four straight meetings to prevent inflation running near the top of their target range from damaging economic activity.
Brazil’s economy grew 1.5 percent during the second quarter, or an annualized 6 percent, as investments picked up. Latin America’s largest economy will expand 2.7 percent this year, up from 0.9 percent in 2012, according to the latest central bank estimate. Retail sales in July rose 1.9 percent from June, almost 10 times faster than forecast by economists in a Bloomberg survey.
Policy makers on Aug. 28 raised the benchmark Selic by a half-percentage point to 9 percent. They have boosted the rate by 175 basis points since April, the fastest pace of monetary tightening among major world economies tracked by Bloomberg.
Annual inflation measured by the IPCA index decelerated in August to 6.09 percent, the slowest since December, the national statistics agency said Sept. 6. Brazil targets annual inflation at 4.5 percent, plus or minus two percentage points.