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Sao Paulo - Brazil’s economy stalled in the third quarter, failing to register any growth as it felt the impact of the widening eurozone crisis and weakening global growth.
Latin America’s largest economy posted 0.0% growth in the third quarter from the second, government statistics agency IBGE said on Tuesday. That result was in line with the median forecast of 25 analysts polled by Reuters.
The economy grew 2.1% compared to the year-earlier period, IBGE said. That was below expectations of 2.4%, according to the median forecast of 22 analysts in the poll.
Brazil’s relatively brisk growth earlier this year was also revised down. Quarter-on-quarter, the IBGE said the economy grew 0.7% in the second quarter - revised down from 0.8% - and by 0.8% in the first three months, down from 1.2%.
Consumer spending fell by 0.1% in the third quarter from the previous three months. The industrial sector also shrank, down 0.9% in the period, and capital spending fell 0.2%.
Tuesday’s figures confirm that Brazil’s economy is slowing sharply from last year’s red hot pace of 7.5% and is likely to post 2011 growth of about 3%. The sputtering growth comes as Europe flirts with recession and China also shows signs of cooling.
Growth of around 3% is better than crisis-hit Europe, but well behind the pace of Brazil’s big emerging market rivals such as India and China.
Monthly data from October and November suggest the slowdown is continuing and even deepening as the worsening eurozone crisis hurts demand for Brazil’s exports, which are dominated by commodities such as iron ore and soy.
Industrial production figures for October showed factories cut their output for the third straight month.
President Dilma Rousseff’s government has announced a slew of tax breaks to help support consumption, reprising its policy response in the wake of the 2008 financial crisis.
But analysts say the measures could have less impact this time around as Brazil’s consumers approach the limits of their credit-fuelled spending spree of recent years and inflation pressures remain stubbornly strong.
Citing the gathering global slowdown, the central bank has since August cut interest rates three times by a total of 150 basis points to 11%.
While the first cut on August 31 stirred some economists’ doubts over central bank head Alexandre Tombini’s inflation-fighting credibility, analysts have begun calling him a potential trendsetter as the 17-nation eurozone threatens to dissolve.
Tombini says he believes inflation will slow in coming months from its annual pace in mid-November of 6.69%, which could give the bank room to cut interest rates further in a bid to support flagging growth.
Consumer spending could also be pressured in coming months. Bank lending growth slowed in October from September, even as default rates rose, suggesting Brazilians could be nearing the limits of how much personal debt they can maintain.
Latin America’s largest economy posted 0.0% growth in the third quarter from the second, government statistics agency IBGE said on Tuesday. That result was in line with the median forecast of 25 analysts polled by Reuters.
The economy grew 2.1% compared to the year-earlier period, IBGE said. That was below expectations of 2.4%, according to the median forecast of 22 analysts in the poll.
Brazil’s relatively brisk growth earlier this year was also revised down. Quarter-on-quarter, the IBGE said the economy grew 0.7% in the second quarter - revised down from 0.8% - and by 0.8% in the first three months, down from 1.2%.
Consumer spending fell by 0.1% in the third quarter from the previous three months. The industrial sector also shrank, down 0.9% in the period, and capital spending fell 0.2%.
Tuesday’s figures confirm that Brazil’s economy is slowing sharply from last year’s red hot pace of 7.5% and is likely to post 2011 growth of about 3%. The sputtering growth comes as Europe flirts with recession and China also shows signs of cooling.
Growth of around 3% is better than crisis-hit Europe, but well behind the pace of Brazil’s big emerging market rivals such as India and China.
Monthly data from October and November suggest the slowdown is continuing and even deepening as the worsening eurozone crisis hurts demand for Brazil’s exports, which are dominated by commodities such as iron ore and soy.
Industrial production figures for October showed factories cut their output for the third straight month.
President Dilma Rousseff’s government has announced a slew of tax breaks to help support consumption, reprising its policy response in the wake of the 2008 financial crisis.
But analysts say the measures could have less impact this time around as Brazil’s consumers approach the limits of their credit-fuelled spending spree of recent years and inflation pressures remain stubbornly strong.
Citing the gathering global slowdown, the central bank has since August cut interest rates three times by a total of 150 basis points to 11%.
While the first cut on August 31 stirred some economists’ doubts over central bank head Alexandre Tombini’s inflation-fighting credibility, analysts have begun calling him a potential trendsetter as the 17-nation eurozone threatens to dissolve.
Tombini says he believes inflation will slow in coming months from its annual pace in mid-November of 6.69%, which could give the bank room to cut interest rates further in a bid to support flagging growth.
Consumer spending could also be pressured in coming months. Bank lending growth slowed in October from September, even as default rates rose, suggesting Brazilians could be nearing the limits of how much personal debt they can maintain.
