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Brazil's Central Bank indicator shows GDP contraction in third quarter

Xinhua, November 19, 2015 Adjust font size:

The Brazilian economy registered a contraction of 1.4 percent in the third quarter of 2015 compared with the second, according to the Brazil central bank's economic-activity index (IBC-Br), released on Wednesday.

The IBC-Br indicator is considered a preview of the official GDP growth figures, which are released by Brazilian Institute of Geography and Statistics (IBGE), the government's official statistics agency. The official third quarter figures are expected to be disclosed in early December.

It is also used by the Central Bank's Monetary Policy Committee (COPOM) to define Brazil's annual basic interest rate, which is presently 14.25 percent, the highest level registered in the five years of President Dilma Rousseff's administration.

If the Central Bank's estimates are confirmed, Brazil will continue to be in recession. So far, indicators do not look promising as retail sales were down 0.5 percent in September, while industrial output was down 1.3 percent.

Projections for this year's GDP are also all negative. The government estimated a fall of 2.8 percent in 2015, while financial market economists predicted a 3.1-percent decrease in the latest focus market survey, carried out by the Central Bank.

If the government's estimates are confirmed, Brazil will face its worst annual GDP results in 25 years.

Estimates for 2016 also anticipate a GDP contraction, albeit a less severe one. The government foresees an economic contraction of 1 percent, while economists consulted believe it will be closer to 2 percent. Endi