Brazil economic activity up 1.3% in Q1 following steeper-than-expected drop in March

BRASILIA - Brazil's economic activity grew 1.3% in the first quarter from the previous three months, central bank data showed on Monday, following a sharper-than-expected contraction in March.

The IBC-Br index, a proxy for gross domestic product, fell 0.7% in March from February on a seasonally adjusted basis, compared with a 0.2% drop expected in a Reuters poll.

All sectors tracked by the central bank declined, with services, the main driver of Brazil's economy, falling 0.8% from the previous month.

The data add to signs of an economic slowdown as the central bank continues its monetary easing cycle despite renewed inflationary pressures, partly driven by higher energy prices following the U.S.-Israel conflict with Iran.

The IBC-Br index rose 1.8% in the 12 months through March on an unadjusted basis, and increased 3.1% from a year earlier.

Policymakers have cut interest rates by 25 basis points at each of their last two meetings, bringing the benchmark rate to 14.50% as they aim to steer inflation toward the 3% target.

Annual inflation in Latin America's largest economy accelerated to 4.39% in April.

(Reporting by Marcela Ayres; Editing by Chizu Nomiyama )

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This story was originally published May 18, 2026 at 7:41 AM.