Brazil exits recession

Published Nov 28, 2014

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Brasilia - Brazil's economy grew 0.1 percent in the third quarter compared with the second, crawling timidly out of recession, the government said Friday.

The manufacturing sector in particular, which had been hard hit by an economic slowdown, began to grow in the third quarter, said the Brazilian Institute of Geography and Statistics.

The services sector has also started to expand, it added.

However, compared with the same quarter last year, GDP was still down 0.2 percent in the third quarter.

Brazil's economy is the world's seventh largest.

It contracted for two consecutive quarters in the first half of the year, officially entering recession.

The return to growth in the third quarter, though underwhelming, is welcome news for leftist President Dilma Rousseff, who narrowly won re-election last month after presiding over four years of sluggish growth.

Rousseff, who is deeply unpopular in the financial world, shook up her economic team Thursday in a bid to revive market confidence.

She named Joaquim Levy, a bank executive nicknamed “Scissorhands” for his steely budgetary management, as her finance minister.

Levy vowed to rein in the government's books and set a primary surplus target of 1.2 percent of GDP next year.

As of September, Brazil had managed to save just 0.61 percent of GDP this year.

Central bank chief Alexandre Tombini, who kept his post through the shake-up, vowed to tackle inflation that is stubbornly hovering above the official target ceiling of 6.5 percent.

Rousseff, 66, has struggled to rekindle the economic magic of her predecessor and mentor, Luiz Inacio Lula da Silva, who presided over strong growth during his eight-year administration - peaking at 7.5 percent in 2010, the year Rousseff was elected to succeed him.

Under Rousseff, Brazil has posted growth of 2.7 percent in 2011, 1.0 percent in 2012 and 2.5 percent last year.

This year, the central bank is forecasting growth of just 0.7 percent, it said in September, slashing its previous forecast of 1.6 percent.

The International Monetary Fund also cut its 2014 growth forecast for Brazil, from 1.3 percent to 0.3 percent. - Sapa-AFP

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