2019.05.3009:26:00UTC+00Brazil Economy Shrinks For First Time Since 2016

Brazil's economy contracted in the first quarter of the year for the first time since the final three months of 2016, led by a poor performance in the manufacturing and mining sectors and weaker investments, preliminary data from the statistical office IBGE showed on Thursday.

Gross domestic product decreased 0.2 percent from the previous three months, when it grew 0.1 percent.

The latest contraction was the first since the fourth quarter of 2016, when the economy shrank 0.6 percent.

Output in the industrial sector fell 0.7 percent, while production in the farm sector decreased 0.5 percent. Services grew 0.2 percent.

On the expenditure side, investments decreased 1.7 percent, government spending rose 0.4 percent and private consumption grew 0.3 percent.

Exports decreased 1.9 percent, while imports grew 0.5 percent.

On a year-on-year basis, GDP rose 0.5 percent in the first three months of the year after a 1.1 percent increase in the fourth quarter.

The accumulated GDP for the last four quarters grew 0.9 percent from the preceding four quarters and 0.5 percent from the same period last year.

Capital Economics economist William Jackson attributed the latest quarterly fall in GDP partly to the impact of temporary factors including a slump in iron ore output.

"But the early signs are that growth in Q2 has been very weak too and there is now a real risk that the economy will slip into a technical recession," Jackson said. "That could bring interest rate cuts onto Copom's agenda."