Brazil's Q3 GDP expands 6.8%

Brazil���s economy expanded more than expected in the third quarter, as investment and consumer spending remained resilient in the early days of the global economic crisis.

Gross domestic product jumped 6.8% from the same period a year earlier, more than the median 5.8% forecast in a survey of 31 analysts. Brazil���s $1.3 trillion economy climbed 1.8% from the second quarter, the national statistics agency said on Tuesday.

Latin America���s largest economy has since cooled as companies slash jobs and sales forecasts in anticipation of slower growth and tightening credit next year. Morgan Stanley expects the economy to soon enter a technical recession, as defined by two consecutive quarters of negative growth, for the first time since 2003.

���The third quarter report is on investors��� backburner,��� Jankiel Santos, chief economist at Banco Espirito Santo de Investimento, said in an interview. ���Nobody thinks there will be any good economic news in the coming months.���

Brazil���s automobile industry, which contributes 5% of GDP, has trimmed 500 jobs since the crisis began and carmakers such as Fiat and General Motors have given thousands of workers early vacations. To fill the gap left by scarce credit, the federal and state governments have pledged 8 billion reais to the financial arms of carmakers who saw sales plunge 25% in November, the biggest drop in five years.

Even as the economic outlook worsens, annual inflation at 6.34% remains near the 6.50% upper-limit of the government���s target band. Given the uncertainty on prices triggered by a three-month, 30% slide in the local currency, Brazil���s central bank is expected on Wednesday to leave its benchmark interest rate unchanged at 13.75%, according to 44 of 46 economists in a Bloomberg survey.