The IBC-Br economic activity index, a leading indicator of the Gross Domestic Product, it fell 0.05% in the seasonally adjusted comparison in October from the previous month, versus a 0.5% growth forecast from economists polled by Reuters.
The central bank also revised September performance to stable, from a slight increase of 0.05% previously reported.
The Government and economists predicted a slowdown in growth in the second semester due to the effects of interest rate hikes.
The Central Bank kept interest rates at 13.75% this month for the third time in a rowafter an aggressive tightening of credit conditions for a total of 1,175 basis points since March 2021.
The strong recovery in the services sector after the impact of the pandemic, an increasingly solid labor market and the fiscal stimulus offered on the eve of the presidential election have been propping up economic activity.
But higher borrowing costs began to weigh on credit and affect consumer spending.
The IBC-Br index grew 3.68% in the non-seasonally adjusted comparison since October 2021 and posted an advance of 3.13% in 12 months, the Central Bank said.
According to a weekly survey by the Central Bank, private economists project a 3.05% expansion for Brazil’s GDP this year.
Brazil’s economy shrinks: impact on Argentina
A lower growth of the brazilian economyArgentina’s main trading partner, can have an impact negative in the exchange. In fact, as an economist explained to Ámbito, “It is estimated that for every point of GDP that Brazil grows, the economy benefits by 0.3 points of growth”.
“Therefore, focusing on the slowdown in growth, which is going to have an impact on our exports, is important. Above all, taking into account industrial exports. It must be taken into account that a moderation of growth in Brazil can put pressure on imports due to surplus production in Brazil”, the analysis continued.
Source: Ambito
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