GDP predictor confirms recovery will be harder than expected

The Brazilian Central Bank’s Economic Activity Index (IBC-Br), considered to be a bellwether for the official GDP growth rate, rose 1.31 percent in May. This was the first positive result in two months, but remained far below markets’ 4.4-percent growth projection, in another sign that Brazil’s recovery definitely won’t be a V-shaped one.

This slightly improved performance was not nearly enough to offset the 9.45-percent plunge seen between March and April. In 12 months, IBC-Br is down 2 percent and, compared to May 2019, the month’s performance suffered a 14.24-percent blow.

The meager recovery was fostered by a 7-percent growth in industrial output, a 13.9-percent increase in retail sales — jumping to 19.6 percent when sales of vehicles and construction industry material are factored in — and a 0.9-percent drop in services.

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