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Brazil falls into recession as election looms

BRASILIA--Brazil, Latin America's largest economy, has slid into recession, further weakening President Dilma Rousseff, who faces an increasingly tough re-election battle on Oct. 5.

GDP shrank 0.6 percent in the second quarter, Brazil's national statistics institute said Friday, and revised its formerly positive growth estimate for the first quarter down to -0.2 percent.

Coming ahead of October presidential and general elections, those figures will damage already low industrial and consumer confidence in what once was a fast-growing regional powerhouse.

The contraction comes with Rousseff locked in a tough fight to win another term in office, with latest polls indicating a major surge in support for Marina Silva, challenging her from the left.

An opinion poll showed for the first time Silva tying Rousseff in the election's first round, with both candidates receiving 34 percent of the vote, and Silva pulling ahead by 10 percentage points in a runoff.

Previous polls had Silva trailing in the first round.

Silva, a former environment minister under Rousseff's predecessor Luiz Inacio Lula da Silva, shot to prominence after Socialist candidate Eduardo Campos died in a plane crash on Aug. 13.

She had been Campos' running mate and took the reins of his campaign.

“Technically, we are in recession ... and this is very worrying,” Silva said. “Brazil must regain credibility — that is the only way it will return to growth.”

Rousseff shrugged off the latest economic data, saying it was in part due to a slew of public holidays that the government granted during the month-long soccer World Cup in June-July.

Citizens enjoyed an afternoon off on Brazilian match days and host cities also had a holiday every time they hosted a game, dampening economic activity.

“I think this result is just a blip. Brazil has every chance of a resumption” of growth later in the year, Rousseff insisted.

While most eyes were on football, industrial activity dipped 1.5 percent in April-June and second quarter investment slumped 5.3 percent, the IGBE national statistics agency figures showed.

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