Brazil Economic Activity


Economic activity declines for the first time since 2008

In June, economic activity contracted a seasonally adjusted 0.3% over the previous month, according to the Central Bank's monthly indicator for economic activity (IBC-Br, indice de Atividade Economica do Banco Central). The reading contrasted May's 0.1% month-on-month rise and came in below market expectations of a 0.1% drop. In fact, June's decline in economic activity was the first drop since December 2008. A quarter-on-quarter analysis suggests that economic growth is slowing, as the three-month moving average of economic activity expanded 0.7% in seasonally adjusted terms in the three months to June, down from the 1.1% increase recorded in the three months to May. The IBC-Br is highly correlated to the GDP series and thus represents a good proxy for economic growth. On an annual basis, economic activity expanded 2.9% in June, down from the 4.2% increase tallied in May. Consequently, the trend continues to point downwards, with annual average growth falling from 5.3% in May to 4.9% in June.


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