Political Risk Latin America Blog @PolRiskLatam

Brazil Second-Quarter GDP Slowed Less Than Expected

Posted in Political Risk by politicalrisklatam on September 3, 2010

by Matthew Bristow and Iuri Dantas for Bloomberg, September 3rd, 2010.

Brazil’s economic growth slowed less than expected in the second quarter, on a record jump in investment, adding to pressure on the central bank to resume raising interest rates in 2011. Yields jumped.

Gross domestic product grew 1.2 percent in the three months through June from the previous quarter, compared with a 2.7 percent expansion in the first quarter, the national statistics agency said today in Rio de Janeiro. Economists surveyed by Bloomberg expected 0.7 percent growth, according to the median of 41 forecasts. GDP grew 8.8 percent from the previous year.

The central bank this week voted to hold the benchmark interest rate unchanged at 10.75 percent, citing lower inflation risks as economic growth slowed from its fastest pace in 15 years during the first quarter.

Today’s stronger-than-expected report is reinforcing market bets that “the central bank will be forced to resume tightening right after the elections, or in the first quarter of 2011,” said Zeina Latif, senior economist for Latin America at RBS Securities Inc. in Sao Paulo. (continue reading… )

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