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19th February, 2018

Economic activity in Brazil expanded at a faster-than-expected pace in December, capping the first annual increase in four years following the deepest recession in decades.

The central bank’s economic activity index rose 1.41 percent from November on a seasonally adjusted basis, the bank said on Monday, surpassing the median 1.1 percent median forecast in a poll of economists. Economic activity rose 1.04 percent in 2017 from the year before, painting a brighter picture for Latin America’s largest economy ahead of the release of gross domestic product (GDP) figures on March 1.

Consumer spending spiked last year due to record-low interest rates, slow inflation and falling unemployment, while investment slowly inched up as companies burned through debt and idle capacity. Economists expect the recovery to shift up a gear in 2018, driving the fastest GDP growth rate since 2013 and upping the stakes as voters head to the polls to elect President Michel Temer’s successor.

With Temer’s approval rates at single-digits, it is uncertain whether the winning candidate will stick to his platform of deregulation, privatisation and deficit-cutting, which analysts say is crucial to maintaining economic momentum.

Source: Reuters

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