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By Silvio Cascione
BRASILIA, Jan 15 (Reuters) - Economic activity in Brazil slowed in November for the ninth straight month as the country sank into one of the world’s deepest recessions for the year, but the drop was smaller than expected due to a surprise increase in retail sales.
The Brazilian central bank said on Friday that its IBC-Br economic activity index, which measures the farming, industry and service sectors, fell 0.52 percent from October after seasonal adjustments.
A Reuters survey of 17 analysts had forecast a 1.00 percent decline in the indicator. The survey had been conducted before retail data showed a surprise increase in early holiday sales of appliances and electronics.
Economic activity plunged 6.14 percent from November 2014, highlighting the intensity of a recession that has helped send the President Dilma Rousseff’s government to the brink of collapse and shocked investors who had poured funds into the world’s seventh-largest economy until recently.
A Reuters poll this week shows Brazil’s economy shrinking 2.8 percent in 2016 following an estimated drop of 3.7 percent last year. Only Venezuela had a worse outlook in the global survey, which covered all G20 countries plus a few mid-sized economies.
Analysts said the surprise recovery in retail sales in November was probably an anticipation of Christmas demand due to “Black Friday” and “Cyber Monday” discounts. A likely slump in December sales could weigh on economic activity, they added.
“The IBC-Br index will probably keep its negative trend, with no signs of recovery,” MCM Consultores economists said in a research note.
Brazil’s economy floundered in 2015 after Rousseff and the central bank raised taxes, cut investments and jacked up interest rates to keep both inflation and public deficits under control. Consumer and business confidence plunged as prices continue to rise far above the official target and agencies stripped the country of its investment-grade rating.
A massive corruption scandal at state-controlled oil producer Petroleo Brasileiro SA has also weighed on the economy. Executives from top construction, engineering and financial companies are under investigation or in jail.
The severe economic downturn has already cost more than 1 million jobs. Brazil’s national unemployment rate rose to 9.0 percent in the three months through October from 8.6 percent in the previous three months, data showed on Friday. (Reporting by Silvio Cascione; Editing by Alison Williams and Lisa Von Ahn)