Brazil’s GDP Posts Surprise Expansion

Brazil offered fresh evidence that its economy is on a solid path to recovery by posting surprising growth in the second quarter, economists said. Gross domestic product rose 0.93% over the first quarter, signaling the second consecutive period of expansion, according to the Brazilian Institute of Statistics and Geography. The nation had already confounded forecasters in the first quarter with growth of 1% over 1998’s final quarter, disproving dire predictions after a jolting 30%-plus currency devaluation against the U.S. dollar in January. But many economists had expected the economy to zigzag on its road to recovery and predicted a dip in the second quarter. Economists credited the performance to Brazil’s quick comeback from January’s crash of the country’s long-steady currency, the real. Although weak in recent weeks, the real has been relatively stable, while interest rates are at their lowest levels in a year and inflation is tame. Economists also credit a bumper grain harvest and investments in privatized industries such as telecommunications.