MercoPress. South Atlantic News Agency

Brazil just managed to skim recession last year with 0.1% growth but is expected to shrink in 2015

The bureau said the better-than-expected 2014 results were mainly due to 0.7% growth in the services sector and a 0.4% rise in the agribusiness sector.

Brazil's economy grew just 0.1% last year, barely keeping the country out of a recession, the government's statistics bureau said on Friday. It was the worst result since 2009 and bad news for President Dilma Rousseff, whose popularity has plummeted along with Brazil's economic performance.

 To blame for last year's poor performance was a drop in investments, which fell 4.4% from 2013. Consumer consumption had been a driving force for the economy for years, but it grew just 0.9% last year.

“This seems unsustainable given the run-up in consumer debt and signs that the labor market is weakening,” London-based Capital Economics said in an emailed statement.

Still, most economists were expecting figures from the IBGE statistics bureau to show the country actually entered a recession last year. Most private economists polled by the Central Bank expect Brazil to be in a recession this year.

The bureau said the better-than-expected 2014 results were mainly due to 0.7% growth in the services sector and a 0.4% rise in the agribusiness sector. The industrial sector shrank 1.2%.

Brazil’s meager 2014 growth also hanged on government consumption, a symptom of the country’s deepening imbalances. While the 1.3% increase in public sector demand avoided a sharper drop in economic activity, it also boosted public debt, raising eyebrows at ratings agencies that threatened to strip Brazil’s debt of its investment-grade rating.

IBGE said Brazil's 2014 GDP totaled 5.52 trillion Real (1.63 trillion dollars), while the country's GDP per capita was 27,229 Real (about 8,500 dollars).

Looking ahead with Rousseff forced to balance the budget and cut public spending in order to regain investor confidence, Brazil’s economy is set to shrink 0.8%, which would be its deepest slump in 25 years, according to market estimates.