By Silvio Cascione
BRASILIA, April 17 Economic activity in Brazil
grew in February at the fastest pace since January 2010, a
central bank indicator showed on Monday, in the strongest sign
yet that Latin America's largest economy is emerging from a
Bumper harvests are expected to have lifted agricultural
production in the first quarter of the year, while industrial
output improved on a pick up in car exports.
Brazil's IBC-Br index rose 1.31 percent from January after
seasonal adjustments, the central bank said, after an upwardly
revised increase of 0.62 percent in the previous month.
The median expectation in a Reuters poll of economists was
for an increase of 0.55 percent in February.
Evidence of economic growth in Brazil after two years of a
severe downturn suggests that government efforts to bolster
growth through deep interest rate cuts and market-friendly
reforms could be starting to bear fruit.
Commerce and services were forecast to take longer to
recover due to record-high unemployment, but nevertheless grew
in the beginning of the year, data showed earlier this month.
"The very large upward revisions to the January retail sales
and services sector data, allied with the expected large
expansion of the agricultural sector gives us confidence that
after an 11-quarter-long recession the economy has reached an
inflexion point," wrote Alberto Ramos, head of Latin America
economic research at Goldman Sachs.
The index measures activity in agriculture, industry and
services and is considered an advance indicator of gross
domestic product data. Brazil's GDP is forecast to grow 0.4
percent in 2017 from 2016, when it shrank 3.6 percent, according
to a weekly central bank survey of economists also on Monday.
"The economy will likely get to the end of this year with a
meaningful growth rate," Finance Minister Henrique Meirelles
said in a speech during an event in Brasilia on Monday.
Economists warn, however, that the economic recovery could
falter if President Michel Temer fails to pass a landmark
pension reform through Congress in coming months or is toppled
by a massive corruption scandal that has ensnared many of the
nation's senior politicians.
The reform is seen as a crucial step to keeping Brazil's
debt under control in the long term.
"Without the reform or with the approval of a weakened
proposal, chances are high that the government will not be able
to enforce its spending cap and public debt will become
unsustainable," economists with Itau Unibanco said in a note.
(Reporting by Silvio Cascione; Editing by Chizu Nomiyama and