Brazil: Economic growth picks up in March
May 18, 2011
In March, economic activity expanded a seasonally adjusted 0.5% 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 represented an improvement over the revised 0.4% increase registered in February (previously reported: +0.3% month-on-month). A quarter-on-quarter comparison suggests that economic growth continues to gather pace in the first quarter of the year, as the three-month moving average expanded 1.3% in seasonally adjusted terms, up from the 1.0% observed in the December-February period. The IBC-Br is highly correlated with the GDP series. On an annual basis, economic activity decelerated notably, expanding 1.5% in March, down from the 7.0% increase observed in February. The deceleration reflected the higher comparison base of March 2010, when economic activity surged 11.3%. Accordingly, the trend continued to point downwards, with annual average growth moderating from 7.3% in February to 6.5% in March. As inflationary pressures continue to persist, with inflation remaining above the 4.5% target, policymakers face the difficult task of bringing the Brazilian economy back onto a more sustainable path of economic growth.