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Central Bank: Economic Activity in Brazil Has a Contraction of 0.68% in Q1

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The Brazilian economy ended the first quarter in contracting, after three negative monthly results, Central Bank data showed on Wednesday, confirming concerns about the pace of economic activity and the country’s growth prospects.

The Central Bank’s Economic Activity Index (IBC-Br), a kind of indicator of Gross Domestic Product (GDP), fell by 0.28 percent in March compared to the previous month, according to a seasonally adjusted data released by the Central Bank.

The result was worse than the expected fall of 0.20 percent in Reuters poll, followed by a decline of 0.98 and 0.11 percent, respectively, in January and February.

As a result, the indicator contracted 0.68 percent in the first quarter in relation to the previous three months, in a seasonally adjusted number.

In comparison with March 2018, the IBC-Br showed a fall of 2.52% and, in the accumulated in 12 months, it was up 1.05%, according to figures observed.

The month of March was marked by contractions in both industry and services, in an environment of the unemployment rate of 12.7 percent in the first quarter, with almost 13.4 million unemployed, and a record number of discouraged.

Industrial output fell 1.3 percent in the month, the strongest pace of losses for March in two years, while services volume lost 0.7 percent in March.

Retail sales grew 0.3 percent over February but outperformed.

The GDP figures for the beginning of 2019 will be announced by the IBGE on May 30. In the fourth quarter of last year, GDP grew 0.1 percent over the third and ended 2018 with an expansion of 1.1 percent, according to IBGE data.

On Tuesday, the Central Bank pointed out a “significant probability” that the Brazilian economy has retreated slightly in the first quarter of this year over the previous three months.

The growth expectations for Brazil have been suffering successive reductions. The latest Focus survey conducted weekly by the BC with a hundred economists has shown that the estimate for activity this year is growing by 1.45 percent to 2.50 percent by 2020.

Economy Minister Paulo Guedes said in a public hearing at the Congressional Joint Budget Commission (CMO) that the government’s projected growth for the economy this year has fallen to 1.5%. For now, the government officially estimates an increase of 2.2% of GDP.