Home / News / World /  Brazil economy surges most on record amid billions in Covid cash

Brazil’s economy recorded its fastest growth on record in the third quarter as a powerful combination of monetary stimulus and government spending resuscitated consumer demand during the coronavirus pandemic.

Gross domestic product jumped 7.7% from the previous three-month period, less than the median estimate for an 8.7% rise from analysts in a Bloomberg survey. It was still the largest quarterly increase in a data series going back to 1996. From a year ago, the economy contracted by 3.9%, the national statistics agency reported on Thursday.

Latin America’s largest economy rebounded from a historic plunge on the back of stimulus including record-low interest rates, fresh cash for loans and monthly payouts for informal workers. The measures propelled retail sales back to pre-pandemic levels, while other sectors such as services gained more slowly. Yet this week President Jair Bolsonaro signaled his government won’t extend emergency stipends into 2021 as public debt surges.

In the third quarter, industry jumped by 14.8% and investments surged by 11% from the April-June period, the statistics agency reported. Family consumption rose by 7.6% on the quarter, while agriculture slipped by 0.5%.

Brazil’s gross domestic product will still shrink by 4.8% this year according to analysts in a Bloomberg survey, probably less than regional peers including Argentina, Chile, Mexico and Colombia.

While Economy Minister Paulo Guedes has said the nation’s growth is bouncing back in a V-shape, there are plenty of headwinds ahead. Aside from the rollback of stimulus spending, Brazil’s unemployment rate is at a record high and Covid-19 infections are rising again in the country’s most populous areas, including its financial capital Sao Paulo.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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