SAO PAULO (Reuters)Brazilian economic activity contracted in February by the most in nine months, a central bank indicator showed on Monday, adding to concerns about a sluggish start to the year for Latin America's largest economy.
The central bank's IBC-BR economic activity index, a leading indicator of gross domestic product (GDP), fell 0.73 percent in February from January. That followed a revised drop of 0.31 percent in January, a smaller contraction than first reported.
"Economic indicators so far continue to suggest a slight drop of 0.1 percent for GDP in the first quarter of this year," Bradesco economists wrote in a note.
The data adds to pressure on new President Jair Bolsonaro to reignite an economic recovery which has been lackluster since Brazil's deep 2015-2016 recession. The cornerstone of Bolsonaro's economic agenda is a pension reform bill aimed at restoring public finances, which received a rocky reception in Congress.
Treasury Secretary Mansueto Almeida told Reuters last week that Brazil must stick to its fiscal commitments and cut public spending for the long-term benefit of the country, even if that has a detrimental short-term effect on the economy.