Brazil’s economy shrank 1.2% in the third quarter as pressure mounted on the scandal-hit Lula administration. The performance, which was much worse than analysts had been expecting, came after a rise in output of 1.1% in the second quarter. Analysts suggest that Brazil’s high interest rate is stifling growth. At one point the base rate was at 19.75%, before dropping back to 18.5%. Confidence in Brazil has also been shaken by corruption scandals involving the ruling PT Party.
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