Latin America’s largest economy shrank more than analysts forecast, as rising unemployment and higher inflation sapped domestic demand, pulling the nation deeper into recession.
Gross domestic product in Brazil contracted 1.7 percent in the three months ended in September, after a revised 2.1 percent drop the previous quarter, the national statistics institute said in Rio de Janeiro. That’s worse than all but three estimates from 44 economists surveyed by Bloomberg, whose median forecast was for a 1.2 percent decline. It also marks the first three-quarter contraction since the institute’s series began in 1996.
A sprawling corruption investigation has caused political gridlock in Brasilia, delaying President Dilma Rousseff’s efforts to pass measures to fortify fiscal accounts and revive confidence. As the budget deficit has swelled, boosting threats of further sovereign downgrades to junk, the government Monday was forced to impose a partial shutdown, freezing discretionary spending. Meanwhile, the central bank has boosted borrowing costs to the highest since 2006, depressing demand and boosting unemployment, while failing to tame double-digit inflation.
Brazil Energy Insight 
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