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Brazil economy expected to show exit from recession

Tuesday, May 16, 2017 - 08:21

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Mr Crespo said agriculture would be the mainstay of that tepid recovery, "because the services sector is still very weak and industry has a long way to go."

[BRASÍLIA] Brazil is primed to show a return to growth, the Central Bank indicated on Monday, raising hopes that Latin America's biggest economy could be inching out of a two year recession.

The official gross domestic product statistic is not published until June 1, but the bank issues a preview called the economic activity index. It showed 1.12 per cent growth in the first quarter from the last quarter of 2016.

Center-right President Michel Temer's government has been talking up a slow easing of the economic crisis with a return to growth this year.

"The worst is behind us, but I don't want to say that it's over," said Ignacio Crespo, an economist at Guide Investimentos in Sao Paulo.

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The Brazilian economy plunged by 3.8 per cent in 2015 and 3.6 per cent in 2016, the worst recession on record. This year GDP should grow overall by 0.5 per cent, the government says.

Mr Crespo said agriculture would be the mainstay of that tepid recovery, "because the services sector is still very weak and industry has a long way to go."

Mr Temer, who took over last year after leftist president Dilma Rousseff was impeached, is pushing through reforms to shrink the budget and bring finances under control. His centerpiece, a raising of the minimum retirement age, faces strong opposition.

Despite signs of hope in the economy, unemployment remains at a record 13.7 per cent, with more than 14 million people out of work.

AFP

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