UPDATE 1-Brazil's economic activity grows unexpectedly in February
(Adds comments, background, details on 12-month data)
By Silvio Cascione
BRASILIA, April 15 (Reuters) - Brazilian economic activity grew unexpectedly in February from the previous month, central bank data showed on Wednesday, but economists said the increase was too small to dispel forecasts for a recession this year in Latin America's largest economy.
The Brazilian central bank's IBC-Br economic activity index , a gauge of farming, industry and services activity, rose a seasonally adjusted 0.36 percent from January, topping market expectations for a drop of 0.2 percent.
The index is seen as a leading indicator for gross domestic product data, which is released quarterly. Economists have forecast Brazil's economy to shrink about 1 percent in 2015, which would be the country's deepest recession in 25 years.
Although the February result was stronger than expected, it remained weak when compared with the previous year.
Economic activity fell 3.16 percent from February 2014, without seasonal adjustments. In the 12 months through February 2015, the IBC-Br index dropped 0.97 percent, down from a decline of 0.40 percent in the previous month.
Fator economists José Francisco Gonçalves and Julia Araujo highlighted separate surveys that showed a contraction in industrial output and retail sales in the month.
"The outlook for growth in the first quarter remains very bad," they wrote in a research note.
National statistics agency IBGE is set to release official first-quarter GDP results in late May.
Brazil's economy has suffered under a string of tax hikes and government spending cuts put in place by President Dilma Rousseff to safeguard the country's investment-grade rating after a sharp increase in public debt. (Reporting by Silvio Cascione Editing by W Simon)
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