(Bloomberg) -- Brazil’s recovery slowed less than expected in July according to the central bank’s main gauge of activity, as Latin America’s economy grapples with above-target inflation and political tensions.

The central bank’s economic activity index, a proxy for gross domestic product, rose 0.60% on the month in July, more than the 0.35% median estimate in a Bloomberg survey, the bank reported on Wednesday. June’s reading was revised to 0.92% from 1.14%. On the year, activity rose 5.53%.

Vaccinations against Covid-19 are gaining pace in Brazil, with some states now immunizing teenagers as part of broad campaigns that are allowing businesses to reopen. Analysts forecast a stronger pace of growth for the remainder of the year. Still, policy makers remain concerned over headwinds including above-target inflation, weak consumer confidence and a slow labor market recovery.

In that context, analysts surveyed by the central bank lowered their 2021 GDP projection for five straight weeks, to 5.04%.

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