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Brazil Economy Risks Extending Recession as October Disappoints

  • Central bank activity index dropped 0.4% from previous month
  • Growth is losing momentum with high interest rates, inflation
The Conjunto Nacional shopping center in Brasilia, Brazil, on Aug. 31, 2021. 

The Conjunto Nacional shopping center in Brasilia, Brazil, on Aug. 31, 2021. 

Photographer: Dado Galdieri/Bloomberg
Updated on

Brazil’s economy had a bad start to the fourth quarter, underscoring risks of an extended recession as policy makers further tighten monetary policy to battle above-target inflation. 

The central bank’s economic activity index, a proxy for gross domestic product, fell 0.4% in October from the prior month, in line with the median estimate from economists in a Bloomberg survey. September’s reading was revised down to a 0.46% decline. From a year ago, activity plunged 1.48%, more than double the drop estimated by analysts, the bank reported on Wednesday.