(Adds analyst comments, market reaction, context)
By Rodrigo Viga Gaier and Bruno Federowski
RIO DE JANEIRO/BRASILIA, May 30 (Reuters) - The Brazilian economy expanded in the first three months of 2018 for a fifth straight quarter, as expected, easing fears of a slowdown before a nationwide trucker protest this month roiled Latin America’s largest economy.
Brazil’s gross domestic product (GDP) grew 0.4 percent from the prior three months, government statistics agency IBGE said on Wednesday, in line with the median estimate in a Reuters poll of economists. Growth accelerated from an upwardly revised rate of 0.2 percent in the prior quarter, compared to the previously reported 0.1 percent.
GDP rose 1.2 percent from the first quarter of 2017, slightly below a 1.3 percent consensus estimate.
Household spending continued to grow as record-low interest rates and low inflation bolstered consumers’ purchasing power. Capital spending rose for a fourth straight quarter, although more slowly than in the two prior quarters amid uncertainty about general elections coming in October.
A Reuters poll last week showed most economists expected the economy to accelerate in coming quarters, turning the page on a recession that shaved nearly 8 percent off GDP in 2015-16.
Some may begin to question those optimistic outlooks after a truckers protest over the past 10 days blocked major highways and hurt several sectors of the economy.
“If the effects of the truckers’ strike are limited to May, it won’t significantly impact second-quarter figures. But it could trigger protests from other groups, generating economic noise, dampening sentiment and lowering GDP,” said Haitong economist Flavio Serrano.
The median estimate for 2018 GDP growth fell to 2.37 percent in a weekly central bank survey of economists published on Monday, from 2.5 percent a week before.
That would suggest downward pressure to the government’s official 2.5 percent forecast, which it already reduced this month following a string of underwhelming economic indicators.
Yields on interest rate futures fell in early trading amid a global rebound in demand for riskier emerging-market assets, while the Brazilian real strengthened.
With unemployment at double digits and companies grappling with widespread idle capacity, the economic recovery is unlikely to lift inflation, currently hovering below the central bank’s target range.
That should allow the bank to keep interest rates at all-time lows for a long time, according to economist forecasts, providing additional support to the economy.
Maintaining steady growth will hinge on the government’s ability to cut spending and curb growth of public debt, a burden that will likely fall to the next president. (Reporting by Rodrigo Viga in Rio de Janeiro and Bruno Federowski in Brasilia; Additional reporting by Claudia Dolfini in São Paulo; Writing by Bruno Federowski Editing by Susan Thomas and David Gregorio)