November 30, 2012 / 11:21 AM / 5 years ago

UPDATE 1-Brazil economy grows far less than expected in Q3

* GDP expands just 0.6 pct in Q3 vs Q2

* Analysts had expected 1.2 pct expansion

By Brian Winter

SAO PAULO, Nov 30 (Reuters) - Brazil’s economy grew just 0.6 percent in the third quarter from the second quarter, only half the rate expected by financial markets, as a flood of government stimulus failed to stir the Latin American giant out of its long slumber.

Investment dropped for a fifth straight quarter, down 2.0 percent from the previous quarter, the government statistics agency said on Friday. Consumption rose 0.9 percent.

Gross domestic product had been expected to expand 1.2 percent in the third quarter over the second quarter, according to the median forecast of 42 analysts polled by Reuters. The economy’s actual performance was below any of the analysts’ individual forecasts.

Since posting 7.5 percent growth in 2010, Brazil’s economy has struggled with high costs and severe infrastructure and labor bottlenecks that have restrained investment and kept overall activity weak. President Dilma Rousseff has tried to revive the economy with numerous tax cuts and other stimulus, but companies have remained conservative in their bets.

The economy was expected by analysts to grow just 1.5 percent this year, but those forecasts are now likely to be revised down after Friday’s data.

Brazil grew 0.9 percent in the third quarter when compared to the year-earlier period, IBGE said. That was also far below expectations for growth of 1.9 percent, according to the Reuters poll.

The IBGE also revised down second quarter growth to 0.2 percent compared to the first quarter from a previously reported 0.4 percent.

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