Brazil Economic Activity Slows Down as Government Handouts Wane

People wearing protective masks walk through a market in Sao Paulo, Brazil, on Thursday, July 30, 2020. Brazil added 69,074 cases on Wednesday, pushing the total number of infections to over 2.55 million, according to the Health Ministry. Photographer: Jonne Roriz/Bloomberg
People wearing protective masks walk through a market in Sao Paulo, Brazil, on Thursday, July 30, 2020. Brazil added 69,074 cases on Wednesday, pushing the total number of infections to over 2.55 million, according to the Health Ministry. Photographer: Jonne Roriz/Bloomberg

(Bloomberg) -- Brazil’s economic activity slowed in November, as the government pared back emergency cash handouts to informal workers amid the coronavirus pandemic.

The economic activity index, which is a proxy for gross domestic product, rose 0.59% compared to the previous month, the central bank reported on Monday. From a year ago, activity dropped 0.83%.

The central bank is widely expected to hold its interest rate at a record low of 2% on Wednesday amid growth headwinds in Latin America’s largest economy. In September, the government halved monthly stipends that had supported demand before eliminating them completely last month. Still, a recent surge in inflation is expected to lead to higher borrowing costs going forward.

Read more: Brazil Central Bank Warns of Persisting Inflation, Rate Hike