Brazil GDP proxy dips in June on weaker farming sector

BRASILIA (Reuters) -Brazil's economic activity contracted in June, central bank data showed on Monday, reinforcing signs of a slowdown under the weight of high borrowing costs.

The IBC-Br index, a proxy for gross domestic product, fell 0.1% in June from May on a seasonally adjusted basis, missing the 0.05% increase forecast in a Reuters poll of economists.

The decline was driven by a 2.3% drop in the farming sector, detailed central bank data showed. Excluding farming, the index - which also incorporates central bank estimates for industry and services along with production-related taxes - would have posted a 0.1% rise.

In the second quarter, the IBC-Br grew 0.3% from the prior three months.

Official GDP figures for the period will be released on September 2 by statistics agency IBGE.

Brazil's benchmark Selic rate stands at 15%, near a two-decade high, as policymakers seek to rein in annual inflation that has persistently exceeded the 3% target, though it has more recently shown signs of easing.

When keeping rates unchanged in late July, the central bank said the outlook for Latin America's largest economy pointed to moderating growth, while data across sectors and indicators remained mixed.

(Reporting by Marcela Ayres; Editing by Kirsten Donovan)

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