Brazil economy slows unexpectedly

Shoppers at a carnival market in Rio de Janeiro Consumer spending has been sluggish, growing just 0.9% in the quarter

Related Stories

Brazil's economy slowed unexpectedly in the third quarter, new data suggests.

Latin America's biggest country clocked just 0.6% growth in the three months to September versus the previous quarter, half the rate expected by analysts.

Businesses cut their investment by a further 2%, while consumer spending growth was a sluggish 0.9%.

The weak private-sector spending counteracted a big round of stimulus spending unleashed by the government, including tax cuts for businesses.

"It was horrible," said Jankiel Santos, chief economist at BES Investimento in Sao Paulo. "The government is certainly going to be worried about this. The expectation is that they are going to come out with more stimulus measures."

In September, the government cut its growth forecast for the year to 2% - a figure that was still seen as too optimistic by markets even before the latest data release.

Growth for 2012 now looks set to be closer to 1%, compared with 2.7% last year and 7.5% in 2010.

President Dilma Rousseff launched the first in a series of measures aimed at injecting up to $50bn (£32bn) into the economy over the next five years, and increasing the private sector's role in the economy.

The plan included privatising about 14,000km of railways and roads, followed by selling ports and lowering energy costs.

Expensive energy, poor infrastructure and increasing labour costs - known as "Custo Brasil" or the "Brazil Cost" - have weighed on growth, analysts say.

Despite the move, the latest data suggests that Brazilian companies remain unconfident about business prospects.

More on This Story

Related Stories

More Business stories

RSS

Features & Analysis

  • Leonardo da Vinci Self-PortraitMagical masterpiece

    The Leonardo hidden from Hitler in case it gave him special powers


  • Woman smelling pot of herbsWake up

    Is eating sage better for your alertness than coffee?


  • George Foreman and Muhammad AliThe Rumble

    Was this the most compelling sporting event last century? BBC Sport


  • GunGun dilemma

    What if you had a killer product on your hands - literally?


Elsewhere on the BBC

  • EarthWater world

    Are ‘oceans’ hiding inside Earth? BBC Future investigates

Programmes

  • A graphic of an ice tunnel in IcelandThe Travel Show Watch

    A new glacier ice tunnel could be the world’s longest but will tourists fuel its disappearance?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.