Output continued to deteriorate in the Brazilian economy in the month of November, according to the domestic statistics agency IBGE.  Although the measure ticked slightly higher in the month, rising by 0.3% month over month, the annualized figure remained lower – declining by 2.5%.  The annualized decline met expectations of a 2.5% slide and registers as the biggest drop in output activity since October of 2009.

Significant slowdowns in exports due to an appreciating currency are adding to the recently rising list of woes for Latin America’s fastest growing economy – compounding growth concerns by both the country’s government and central bank.  The sentiment has prompted policymakers to opt for reductions in the nation’s benchmark Selic rate – which currently stands at 11%.  Money markets continue to speculate of an additional round of rate cuts – with some forecasting the Selic to stand at 9.75% at the end of 2012.

In addition, Brazil’s ministry of finance passed a broad sweeping stimulus package at the beginning of last month – hoping to inject growth incentives in light of overall gross domestic product that remained unchanged for the third quarter.  According to IBGE, the Brazilian economy had little to no growth compared to the second quarter, but may still fulfill annualized 3% expansion forecasts.  This is hardly the 5% forecasted gain set at the beginning of the year.

As a result, sellers emerged, taking the Brazilian real lower against the US dollar in the session.  Falling by almost 1%, the real is currently trading at 1.8395 against the greenback.