Brazil’s economy disappoints, raising global fears

CNBC/Reuters, 11/30/2012

Brazil’s economy posted extremely disappointing growth in the third quarter, piling pressure on President Dilma Rousseff to make deeper structural reforms and raising new fears that big emerging markets are getting dragged into the stagnant morass of the global economy.

The economy expanded just 0.6 percent in the third quarter from the second quarter, government statistics agency IBGE said on Friday. That was just half the pace expected by financial markets, and below any of the forecasts by 42 analysts in a Reuters poll.

Brazil has been stuck in a pattern of slow growth since Rousseff took office last year, as companies struggle with high costs and severe infrastructure and labor bottlenecks. Rousseff has tried to revive activity with numerous tax cuts and other stimulus, but Friday’s data showed that companies are not responding, as investment fell for a fifth straight quarter.

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