Brazil's economy contracted slightly in the three months to June, government statistics agency IBGE said on Wednesday, stalling more than expected as a second wave of the pandemic hurt demand.
The 0.1% decline in Brazil's gross domestic product from the prior quarter was worse than the median forecast for 0.2% growth in a Reuters poll and marked a sharp slowdown from 1.2% growth in the first quarter.
Still, more government spending and services activity helped avoid a wider downturn, offsetting a drop in fixed investments and weaker agricultural output during a weak coffee harvest.by the central bank and weighing on the outlook for next year, when President Jair Bolsonaro faces an uphill battle to win re-election.
"With today's number, we think there may be a slight downward revision. Let's see," he told a congressional hearing. As vaccination rates gather steam and coronavirus cases continue to fall, the 2021 growth outlook in a weekly central bank poll of economists climbed as high as 5.3% this month before settling at 5.2% in the latest poll.
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