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Brazil GDP seen as slower in second quarter

© AFP | Hopes for faster economic growth in Brazil took a severe hit in late May with an 11-day truckers strike that shut down supplies of fuel, food and other goods

RIO DE JANEIRO (AFP) - 

Brazil's economy posted much slower growth in the second quarter due to a truckers strike and electoral uncertainty that could fuel investor jitters at least until October's presidential voting.

GDP in Latin America's largest economy grew just 0.1 percent in the April-June period compared to the first quarter of this year, according to a poll of 23 financial firms conducted by the newspaper Valor. Official numbers are due out Friday.

The economy has lost steam since the first quarter, when GDP growth was 0.4 percent.

Brazil emerged from a punishing two-year recession in 2017, posting yearly expansion of 1 percent.

Government forecasts for 2018 have been scaled back from a GDP rise of nearly 3 percent, down now to 1.5 percent.

Market watchers expect expansion of 1.47 percent, according to a survey by the Central Bank.

Uncertainty over the election is rattling markets and encouraging the decline of the real, which has lost 20 percent of its value against the dollar since January.

Hopes for faster economic growth took a severe hit in late May with an 11-day truckers strike that shut down supplies of fuel, food and other goods in this vast country with a very limited rail network.

"We have an election campaign that is completely undefined, and the possibility of a dispute between extreme positions (in a runoff) has fueled uncertainty and reduced consumption and investment plans," said Carlos Langoni, former chairman of the Central Bank and currently director of World Economy Center at the Getulio Vargas Foundation.

Langoni said the figures due out Friday will weaken the arguments of pro-market candidates "who relied heavily on the idea that the economy is coming out of a long period of recession stemming from leftist governments, thanks to the neo-liberal policies" of outgoing President Michel Temer.

The presidential election is seen here as the most unpredictable one in decades.

Leading in the polls with 39 percent support is former president Luiz Inacio Lula da Silva. But he is in prison, serving a 12 year sentence for corruption, and his candidacy will probably be thrown out by the courts.

Next with 19 percent comes far-right lawmaker Jair Bolsonaro.

None of the other candidates score higher than 10 percent in the polls.

© 2018 AFP