Brazil economic recovery unlikely to be 'V-shaped', says central bank director

By Marcela Ayres and Jamie McGeever

BRASILIA, Aug 13 (Reuters) - Brazil's economy is unlikely to make a 'V-shaped' recovery, in large part because social isolation measures will continue to weigh on the dominant services sector, the central bank's Economic Policy director Fabio Kanczuk said on Thursday.

Instead, the recovery is more likely to be shaped like a Nike 'swoosh' or check mark, Kanczuk said in an online event hosted by the Rio de Janeiro banking association Aberj.

"There will be sectors that will not recover due to social distancing," Kanczuk said.

"You have retail rebounding steadily, industry is ok, but service sectors - services provided to families, including hairdressing, cleaning - they won't bounce back with the same strength," he said.

Figures released by statistics agency IBGE on Thursday showed that services activity in Brazil rose 5% in June, the first increase in five months and the second biggest monthly gain since the index was compiled in 2011.

But activity remains 14.5% lower than in February, before the COVID-19 pandemic hit, and 24% lower than the peak in November 2014.

Brazil's economy is expected to post its biggest-ever annual decline this year, with the government predicting a 4.7% fall. Central bank chief Roberto Campos Neto said this week that Brazil's will be one of the fastest recoveries of any emerging economy.

Kanczuk also said that any future bond purchases by the central bank would be to ensure the market functions smoothly, and not to assist fiscal policy.

The bank has been granted emergency powers to buy public and private sector assets to help navigate the crisis, but so far has indicated a great reluctance to do so. (Reporting by Marcela Ayres Writing by Jamie McGeever Editing by Nick Zieminski)

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