SAO PAULO (Reuters) - The Brazilian economy grew more than expected in the second quarter due to an upswing in consumer spending, as a recovery from the nation’s deepest recession on record remained on track.
Gross domestic product expanded 0.2 percent from the first quarter and 0.3 percent from a year earlier, statistics agency IBGE said on Friday.
Economists had expected the economy to grow 0.1 percent on a quarterly basis and remain flat from a year earlier, according to the median forecast in a Reuters poll.
Latin America’s largest economy slowed from the strong first quarter, when a record soy harvest and buoyant car exports led to the first quarterly growth since 2014.
Still, the report pointed to slow and steady growth. Household spending rose 1.4 percent in the quarter, its first increase in 10 quarters. This reinforced recent signs that consumer spending looks poised to lead Brazil’s recovery.
That should bring some relief to President Michel Temer’s government. Investors see its austerity efforts as critical to restoring long-term growth, but the measures have contributed to Temer’s single-digit approval rating.
Brazil’s situation mirrors a weak growth outlook in both emerging markets and developed economies, which has put policymakers on alert throughout the world.
The Brazilian central bank has cut interest rates aggressively since November. This finally seems to be working, but not enough to lift the annual inflation rate from an 18-year low.
Despite lower interest rates, capital spending dropped 0.7 percent, extending a stunning 30 percent decline since the third quarter of 2013.
Reporting by Bruno Federowski; Additional reporting by Rodrigo Viga Gaier; Editing by Brad Haynes and Lisa Von Ahn