BRASÍLIA: Brazil’s economy expanded in line with expectations in June, as improving business and consumer confidence drives an incipient recovery in industrial production and retail sales. The central bank’s seasonally adjusted economic-activity index, a proxy for gross domestic product, rose 0.23 percent in June from the previous month, after falling a revised 0.45 percent in May. The median estimate of analysts surveyed by Bloomberg was for a growth of 0.2 percent.
Markets have rallied in recent months on bets the impeachment process will strengthen the hand of Acting President Michel Temer and improve his chances of reviving growth. He and his aides have said the ouster of his predecessor Dilma Rousseff, which could be decided this month , will allow him to pursue more ambitious reforms designed to shore up fiscal accounts and attract investment.
Analysts surveyed weekly by the central bank have increased their GDP estimates, forecasting a milder recession in 2016 and a more robust rebound next year. Consumer and business confidence are on the rise as well, leading to some gains in retail sales and industrial output. But Latin America’s largest economy still faces numerous challenges. The highest benchmark interest rate among Group of 20 countries hasn’t damped inflation, while government efforts to curtail spending haven’t made a major dent in a near-record budget deficit.
