By Rogerio Jelmayer

SÃO PAULO -- Brazil's two-year economic recession continued in the third quarter, as the country's heavily indebted companies held investment to a minimum and consumers reined in spending.

Gross domestic product shrank 0.8% from the second quarter, marking the seventh consecutive quarter of contraction, and contracted 2.9% from the third quarter of 2015, the Brazilian Institute of Geography & Statistics said Wednesday.

That was slightly better than expectations of a contraction of 0.9% in the third quarter from the second, according to a Wall Street Journal survey of 10 economists.

The level of investments, considered a key barometer of businessmen confidence, shrank 3.1% in the third quarter from the second and 8.4% versusthe same period year ago earlier, the IBGE said. Consumer spending fell 0.6% from the second quarter and 3.4% from the year-ago period.

In the first nine months of the year, Brazil's economy shrank by 4% compared with the same period of 2015.

"The Brazilian economy is moving very slowly. The absolute priority of companies in Brazil has been to protect their cash flow," rather than looking for new investments, Octavio de Barros, chief economist of local banking giant bank Banco Bradesco SA, said at an event last week.

Brazilian companies of all sizes have been cutting back amid the tough times. The country's biggest steelmaker, Gerdau SA, posted a drastic decline in profit in the third quarter, as revenue tumbled amid low demand. The company said it would cut investment this year by 35%, to 1.5 billion reais ($441 million), and trim it again next year to 1.4 billion reais, which will be dedicated mainly to maintenance projects."We expect, for the coming months, a challenging market scenario, with a gradual and slow recovery in economic activity and lower volume of exports," Gerdau CEO Andre Gerdau Johannpeter said during the company's earnings conference call earlier this month.

Write to Rogerio Jelmayer at

(END) Dow Jones Newswires

November 30, 2016 06:56 ET (11:56 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.