Brazil's recession deepened in the third quarter, central bank data showed on Thursday, adding to pessimism that there would be no quick end to country's two-year-long downturn. Economic activity in Brazil fell 0.78 percent in the third quarter from the previous one, compared with a decline of 0.42 percent in the second quarter, according to the IBC-Br index, which takes the pulse of the agriculture, industry and services sectors.
Brazil's recession - the worst in at least eight decades - began in mid-2014. On a monthly basis, however, the data showed a bright spot. Economic activity rose 0.15 percent in September compared with August, against a decline of 1.01 percent in August versus the preceding month, the central bank said. A Reuters poll of economists had forecast growth of 0.20 percent in September.
The IBC-Br index is considered a leading indicator of official gross domestic product data. Third-quarter GDP numbers are due out on November 30. The recession has left 12 million people unemployed and helped build support for the ouster of President Dilma Rousseff in August after an impeachment trial.
The IBC-Br dip in the third quarter frustrated economists who had predicted the economy would stabilize in the second half of 2016 and pave the way for a moderate recovery in 2017. The surprise election of President-elect Donald Trump has compounded the bleaker scenario by fueling market volatility. "Domestic growth drivers were already weak; global uncertainty adds insult to injury," J.P. Morgan economists Cassiana Fernandez and Vinicius Moreira wrote in a note as they revised down their 2017 GDP growth forecast to 0.8 from 1.1 percent.