Brazil Economy Risks Extending Recession as October Disappoints

• Brazil’s economy had a bad start to the fourth quarter, underscoring the risks of an extended recession as policymakers further tighten monetary policy to battle above-target inflation.  
• The central bank’s economic activity index, a proxy for gross domestic product, fell 0.4% in October from the prior month, in line with the median estimate from economists in a Bloomberg survey.  
• September’s reading was revised down to a 0.46% decline. From a year ago, activity plunged 1.48%, more than double the drop estimated by analysts, the bank reported on Wednesday.  
• Latin America’s largest economy is losing momentum in the aftermath of the pandemic, even as businesses reopen and most of the population is vaccinated against Covid-19. With the annual inflation rate at an 18-year high, activity has shown signs of continued malaise, and both industrial production and services posted unexpected drops in October.

 

(Source: Bloomberg)