Brazil is set to show a return to growth, the Central Bank indicated Monday, raising hopes that Latin America’s biggest economy could be inching out of a two-year recession.
The official gross domestic product (GDP) statistic is not published until June 1 but the bank issues a preview called the economic activity index. It showed 1.12% growth in the first quarter from the last quarter of 2016.
Conservative President Michel Temer’s government has been talking up a slow easing of the economic crisis with a return to growth this year.
“The worst is behind us but I do not want to say that it is over,” said Ignacio Crespo, an economist at Guide Investimentos in Sao Paulo.
The Brazilian economy plunged by 3.8% in 2015 and 3.6% in 2016, the worst recession on record. This year GDP should grow overall by 0.5%, the government says.
Crespo indicated agriculture would be the mainstay of that tepid recovery, “because the services sector is still very weak and industry has a long way to go.”
Temer, who took over last year after populist president Dilma Rousseff was impeached, is pushing through reforms to shrink the budget and bring finances under control. His centerpiece, raising the minimum retirement age, faces strong opposition.
Despite signs of hope in the economy, unemployment remains at a record 13.7%, with more than 14 million people out of work.