RIO DE JANEIRO, BRAZIL – Brazilian economy suffered its largest contraction in nine months this February, a central bank indicator showed on Monday.
The central bank’s IBC-BR economic activity index, a leading indicator of gross domestic product (GDP), fell 0.73 percent in February from January. That followed a drop of 0.31 percent in January, a smaller contraction than first reported. “Economic indicators so far continue to suggest a slight drop of 0.1 percent for GDP in the first quarter of this year,” Bradesco economists wrote in a note.
The data adds pressure on new President Jair Bolsonaro to reignite an economic recovery which has been lackluster since Brazil’s deep 2015-2016 recession. The cornerstone of Bolsonaro’s economic agenda is a pension reform bill aimed at restoring public finances, which received a rocky reception in Congress.
Treasury Secretary Mansueto Almeida told Reuters last week that Brazil must stick to its financial commitments and cut public spending for the long-term benefit of the country, even if that has a detrimental short-term effect on the economy.