May 15, 2020 / 12:57 PM / 15 days ago

CORRECTED-UPDATE 1-Brazil economic activity plunges 5.9% in March, fastest pace on record

(Corrects 4th paragraph to seasonally-adjusted index)

By Jamie McGeever

BRASILIA, May 15 (Reuters) - Economic activity in Brazil fell in March at its fastest pace on record, a central bank indicator showed on Friday, reflecting the impact on commerce and business of social isolation measures implemented late that month to combat the coronavirus outbreak.

The central bank’s IBC-Br index, a leading indicator of gross domestic product, fell 5.9% in March, less than the 6.95% decline expected in a Reuters poll of economists but still by far the biggest since the series began in 2003.

The data for March mean activity declined 1.95% in the first quarter of the year, pointing to a steep fall in GDP for Latin America’s largest economy even before the effects of coronavirus and quarantine are fully felt.

It took the seasonally-adjusted index down to 131.47, its lowest since December 2009, central bank data show.

“Real GDP is now 11.6% below the December 2013 cycle peak, and the contraction in March erased all the growth accumulated since the December 2016 cyclical trough,” Alberto Ramos, head of Latin American research at Goldman Sachs, wrote in a note.

Minutes released this week of the central bank’s latest policy meeting showed officials said indicators for April pointed to a “significantly deeper” economic contraction than previously thought, particularly in the second quarter.

The government lowered its GDP outlook this week and now expects the economy to shrink by 4.7% this year, slightly more pessimistic than the consensus of around 4.1% according to the central bank’s weekly FOCUS survey of economists.

That would be the biggest annual GDP fall since records began in 1900.

But several global investment banks have issued even gloomier forecast revisions in recent days, with JP Morgan, HSBC and Bank of America all predicting a contraction of at least 7% this year.

Reporting by Jamie McGeever; Editing by Andrew Heavens and Nick Zieminski

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