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Brazil Economic Activity November 2022

Brazil: Economic activity drops again in November

Economic activity dropped 0.6% month on month in seasonally adjusted terms in November, which was a deterioration from October’s 0.3% decline. November’s downturn, which marked the fourth consecutive fall in activity, surprised markets on the downside once again; a 0.2% contraction had been penciled in. As expected, the aggressive monetary policy stance taken by the Central Bank to cool economic activity and price pressures—a cumulative 1,175 basis point rate increase from March 2021 to August 2022—started to deliver the desired effect. Contractionary monetary policy has likely weighed on credit, which, amid still-high inflation, should have been affecting private spending and investment in turn.

Meanwhile, on an annual basis, economic activity growth more than halved to 1.6% in November, which was notably below October’s 3.7% expansion and marked the weakest result since January. Nevertheless, the trend was unchanged, and annual average economic activity came in at October’s 3.1% in November.

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