The Brazilian economy expanded a paltry 0.6 percent in the third quarter of 2012 compared with the previous three months, signaling a weaker than anticipated recovery, the Brazilian statistics office said Friday.
The Institute of Geography and Statistics (IBGE) said the economy rose 0.9 percent in the July-to-September quarter compared with the same period of last year, and a mere 0.7 percent so far this year.
Market analysts and the government had expected GDP growth of one percent in the third quarter, but the modest third-quarter rise in the world's sixth largest economy was the strongest this year.
The economy expanded 0.1 percent in the first quarter and 0.2 percent in the second compared with the previous one, according to the latest revised figures.
"The result of the third quarter is not the one percent that we anticipated. And it will drag the annual result down. We now expect GDP growth for 2012 to stand closer to one percent," said Silvia Matos, an economist at the prestigious Getulio Vargas Foundation.
The market is banking 1.5 percent growth this year, a projection similar to one by the International Monetary Fund (IMF) in October.
The IMF also expects Brazil to fare worse than its partners in the BRICS bloc of emerging powers, predicting 7.8 percent growth for China, 4.9 percent for India, 3.7 percent for Russia and 2.6 percent for South Africa.
The food sector surged 2.5 percent in the third quarter while the industrial sector grew 1.1 percent. The service sector remained flat.
The national economy lost steam last year due to the global slowdown, with GDP growth at 2.7 percent, down from a sizzling 7.5 percent in 2010.
The timid growth results from recent government incentives to boost industry and consumption and follows a year of steady cuts in the central bank's key interest rate, now down to a record low of 7.5 percent.
Analyst Roberto Troster, a former chief economist at the Federation of Brazilian Banks, said the government must "change its economic policy, focus less on demand and consumption and more on supply, promoting the structural reforms and the productivity that the country requires."