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Brazil's economy grows faster than expected in Q2, avoids recession

Credit: REUTERS/PAULO WHITAKER

Brazil's economy rebounded strongly in the second quarter of the year after having shrunk in the first, official figures on Thursday showed, meaning Latin America's largest economy comfortably avoided falling back into recession.

By Jamie McGeever

BRASILIA, Aug 29 (Reuters) - Brazil's economy rebounded strongly in the second quarter of the year after having shrunk in the first, official figures on Thursday showed, meaning Latin America's largest economy comfortably avoided falling back into recession.

Brazil's gross domestic product (GDP) expanded by a seasonally-adjusted 0.4% in the second quarter, statistics agency IBGE said on Thursday, twice the median estimate 0.2% in a Reuters poll of economists.

A 0.7% rise in industrial production helped drive the expansion, while the services sector grew by 0.3%, IBGE said. Agricultural output shrank by 0.4%, however.

Compared to the same period a year ago, Brazil's gross domestic product (GDP) grew by 1.0%, faster than the 0.7% forecast in a Reuters poll of economists. The economy was also 1.0% larger on a 12-month accumulated basis.

Within industrial production, which until now had been one of the weakest parts of the economy, manufacturing activity grew by 2.0% on the quarter and construction rose 1.9%, IBGE said.

Capital spending rose 3.2% on the quarter and 5.2% on a year-on-year basis, IBGE said, while government spending fell 1.0% and 0.7%, respectively.

Some economists had feared Brazil would tip back into recession, after the economy shrank by 0.1% in the January-March period, the first contraction since 2016.

(Reporting by Jamie McGeever Editing by Chizu Nomiyama Editing by Chizu Nomiyama)

((jamie.mcgeever@thomsonreuters.com; +55 (0)61 3426 7015; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net))

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