Brazil economy ekes out 0.1% growth in Q3

Brazil eked out GDP growth of 0.1 percent in the third quarter, the government said Tuesday, as high interest rates and a slowdown in the key agricultural sector hit Latin America’s biggest economy.

The result was better than analyst forecasts of a 0.2-percent contraction, a crumb of comfort for President Luiz Inacio Lula da Silva’s government as it seeks to kick-start economic growth.

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The agricultural sector was the main driver of the slowdown, posting a contraction of 3.3 percent from the second quarter.

Despite the sluggish third quarter, analysts forecast gross domestic product growth of 2.84 percent for the year in 2023 and 1.5 percent in 2024 in a poll published Monday by the central bank.

Veteran leftist Lula, who returned to office for a third term in January, has vowed to deliver “solid” economic growth of more than three percent.

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But he has clashed with the central bank over what he calls its “absurdly” high benchmark interest rate, currently 12.25 percent, which he says is putting the brakes on the economy.

The bank had aggressively raised the interest rate to fight soaring prices. But with the annual inflation rate now at 4.82 percent, the bank has begun reducing the interest rate again, with half-point cuts at each of its past three meetings.

© Agence France-Presse