The result, which follows an identical full-year expansion in 2017, means Brazil is stuck in an anaemic recovery following one of its deepest-ever recessions, in 2015-16. Household consumption is lukewarm amid persistently high unemployment. Even so, the annual growth figure was lifted by the large services sector, which grew by 1.3%. Agriculture remained nearly stagnant while industry grew by 0.6% -- even though construction recorded its fifth consecutive year of contraction.
Passing a bold pensions reform would boost market confidence but would not address insufficient demand in the economy.
With limited fiscal space, expediting concessions for private investment in infrastructure will be crucial.
There is a small but not insignificant risk Brazil could suffer a double-dip recession in 2020.
Contraction in developed economies and failure to pass a robust pensions reform would increase risks next year.
