Brazil's economy expanded by 0.6% in the second quarter, down from 1.4% in the first, according to the central bank's GDP proxy index released on Friday.
The slowdown reflects weaker performance across key sectors, including services and industry, which offset gains in agriculture. The central bank's IBC-Br index, a leading indicator of GDP trends, rose 0.6% on the quarter, in line with expectations but below the prior period's pace.
Year-on-year growth reached 3.3%, a deceleration from the 4.2% recorded in Q1. The data underscores the challenges facing Latin America's largest economy as it grapples with inflationary pressures and a tightening monetary policy cycle.
Analysts noted that while the expansion remains positive, the moderation in growth could prompt further scrutiny of the central bank's policy stance. The monetary authority has maintained a restrictive stance to curb inflation, which has remained above target despite recent easing.
The mixed sectoral performance highlights the uneven recovery across Brazil's economy. Services, a major contributor to GDP, saw subdued growth, while industrial output contracted slightly. Agriculture, buoyed by favorable weather conditions, provided a partial offset.
The central bank's IBC-Br index, often viewed as a precursor to official GDP figures, is closely monitored by policymakers and investors for signals on economic momentum. The latest reading suggests that while Brazil's economy remains resilient, risks to the outlook persist amid global uncertainty and domestic policy constraints.
Official GDP data for Q2 is scheduled for release on August 31, with economists expecting a similar pace of growth.
