Brazil: Economic activity drops in February

In February, economic activity fell 0.5% over the previous month in seasonally adjusted terms, according to the Central Bank's monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central). The figure contrasted the 1.4% increase observed in January but undershot market expectations of a 0.7% decline.

On an annual basis, economic activity expanded 0.4% in February, which was well below the 3.8% increase tallied in January. However, the trend points upwards, with annual average growth inching up from 0.8% in January to 0.9% in February. The IBC-Br is highly correlated to the GDP series and thus represents a good proxy for economic growth.

The Central Bank expects GDP to grow 3.1% in 2013, according to its Inflation Report from March. LatinFocus Consensus Forecast panellists expect the economy to expand 3.2% in 2013, which is down 0.1 percentage points from last month's estimate. For 2014, the panel sees GDP growth accelerating to 3.8%.