UPDATE 2-Brazil's economy shrinks for 6th quarter but signals recovery

miércoles 31 de agosto de 2016 10:53 GYT

(Adds comments, details on investments, consumption, imports)

By Silvio Cascione

BRASILIA Aug 31 (Reuters) - Brazil's economy shrank for a sixth straight quarter between April and June, but investments grew for the first time since 2013 and fueled hopes of a modest recovery following the likely ousting of President Dilma Rousseff on Wednesday.

Gross domestic product fell 0.6 percent in the second quarter compared with the first, statistics agency IBGE said on Wednesday, slightly more than the 0.5 percent drop expected by economists in a Reuters poll.

Investments rose 0.4 percent though, in the first increase after 10 straight quarters of contraction. Brazil's industrial output also hit an inflection point, edging up after shrinking for five consecutive quarters.

"We've hit bottom in the second quarter," said José Francisco Gonçalves, chief economist at Banco Fator, in Sao Paulo. "We may see the economy stabilizing in the third quarter, and some growth in the fourth."

Optimism over the end of Brazil's worst recession in decades could boost interim President Michel Temer's popularity as he gears up to propose pension and labor reforms, which investors see as crucial to reestablish the nation as an emerging markets star.

Temer is set to be confirmed in office later on Wednesday after the Senate votes to dismiss Rousseff over charges she broke fiscal rules.

The downturn, one of the world's most severe since the 2008 crisis, has left 1.7 million workers unemployed over the past 12 months and cost the nation its hard-won investment-grade credit rating. The economy is still expected to contract more than 3 percent in 2016 before growing 1.2 percent in 2017, according to market forecasts that have been upgraded in recent weeks.   Continuación...