Brazil's economy sputters ahead of runoff election

By
Thursday, October 16, 2014

Brazil's central bank said on Thursday its IBC-Br economic activity indicator expanded 0.3% month-on-month and contracted 1.35% year-on-year in August.

The country's underperforming economy has been a key factor in the presidential campaign, which pits incumbent Dilma Rousseff of the workers' party (PT) against senator Aécio Neves of center-right PSDB in a runoff vote on October 26.

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In polls published on Wednesday by Datafolha and Ibope, Neves holds a statistically insignificant lead of 45% to Rousseff's 43%.

Brazil's economy fell into a recession in the second quarter, and Capital Economics expects Q3 GDP to be flat, based on July and August economic activity figures.

Capital Economics and Barclays Capital both forecast GDP to expand 0.2% this year, while the IMF predicts growth of 0.3%.

The Brazilian economy grew 2.3% in 2013.

TRUSTWORTHY POLLS?

An ISTOÉ/Sensus poll made headlines last weekend by showing Neves with a commanding runoff lead: 58.8% vs 41.2% for Rousseff.

It is worth noting, however, than no polls had forecast that Neves would make it to the runoff of the general elections. In fact, he was polling third, behind Marina Silva of the center-left PSB party, about a week before the October 5 vote.