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article imageBrazil avoids recession with second quarter growth: official

By AFP     Aug 29, 2019 in Business

Brazil dodged a recession after its economy grew in the second quarter, official data showed Thursday, as the country struggles to recover from a devastating crisis more than two years ago.

The surprising result comes after recent efforts to revive Latin America's biggest economy as it teetered on the edge of another recession.

Last month the central bank slashed interest rates to a record low and President Jair Bolsonaro's government, which has promised to revive the economy, unveiled an $11.2 billion stimulus plan.

Figures showed gross domestic product grew 0.4 percent in the last quarter, the national statistics agency said, compared with the first three months of the year when it shrank a revised 0.1 percent.

Analysts had expected 0.2 percent growth.

Second-quarter GDP expanded one percent from the same period a year earlier.

The better than expected data "confirms that the extremely weak activity recorded earlier this year was a blip rather than the start of a renewed downturn," said William Jackson of Capital Economics in London.

"But the economy is still soft," Jackson added, forecasting a 50-basis point interest rate cut next month.

Bolsonaro came to power in January with an ambitious plan to spur economic activity, starting with a proposal to overhaul the pension system.

The plan to introduce a minimum retirement age and increase contributions over a longer period of time has made it through the lower house of Congress and is now before the Senate.

Its approval is seen as crucial to paving the way for other much-needed reforms, including tax.

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