RIO DE JANEIRO – Brazil’s economic activity expanded 1.15 percent last year with respect to 2017, a sign that the South American giant is continuing to slowly emerge from the deep recession of 2015 and 2016, the Central Bank said Friday.
The figure comes from the bank’s Index of Economic Activity (IBC-Br), which is used as a preview of the gross domestic product (GDP) number released quarterly.
The 2018 result came in below forecasts by financial markets and the government for expansion of around 1.4 percent.
Economic activity rose by 0.21 percent in December 2018 relative to November and 0.18 percent compared to the final month of 2017.
In the fourth quarter of 2018, the IBC-Br index climbed by 0.20 percent with respect to the previous quarter and was 1.53 percent higher than in October-December 2017.
The results indicate Brazil is continuing a slow recovery that began in 2017, when the economy grew 1.1 percent after two years of recession.
The country’s GDP contracted by 3.5 percent in 2015 and 3.3 percent in 2016 due to a series of factors including a drop in commodity prices stemming from China’s economic slowdown and corruption scandals.
The recession was the deepest Brazil had experienced in several decades.
Considered a preview of GDP, the IBC-Br measures the performance of Brazil’s industry, trade, services and agricultural sectors.
It is used by the Central Bank in analyzing the evolution of economic activity and making policy decisions such as determining interest rates.
At present, the Central Bank’s benchmark Selic rate is at a record low of 6.5 percent, although the monetary authority considers that level high enough to keep consumer prices in check and meet inflation targets of 3.9 percent for 2019 and 3.8 percent for 2020.
Brazil’s GDP numbers for 2018 are to be released on Feb. 28 by the Brazilian Institute of Geography and Statistics (IBGE).
In BBVA’s Latin America Economic Outlook for the first quarter of 2019, the Bilbao, Spain-based multinational banking group said it had revised its Brazil growth forecast slightly downward due to a less supportive global environment.
“Recent data support the outlook for a gradual recovery in growth, in line with expectations, but a less favorable global environment will result in lower growth ahead,” the report released this month said.
The bank currently expects Brazil’s economy to grow 2.2 percent in 2019 and 1.8 percent in 2020.