Brazil: Economic activity plunges most in more than four years
July 12, 2013
In May, economic activity fell 1.4% over the previous month in seasonally adjusted, according to the Central Bank's monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central). The figure contrasted the 1.0% increase observed in April and exceeded market expectations of a 1.2% decline. In fact, the reading represents the largest contraction observed since December 2008.
On an annual basis, economic activity expanded 2.3% in May, which was below the 7.3% increase tallied in April. Despite the deceleration, the trend improved, with annual average growth rising from 1.6% in April to 1.7% in May. 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 2.7% in 2013, according to its Inflation Report from June. LatinFocus Consensus Forecast panellists expect the economy to expand 2.6% in 2013, which is down 0.2 percentage points from last month's estimate. For 2014, the panel sees GDP growth accelerating to 3.1%.