Brazil’s economy shrank .5 percent in the third quarter compared to the previous quarter when Brazil’s finance minister declared Latin America’s largest economy was on the road to recovery.

But higher than anticipated inflation and rising interest rates haven’t done much for investors’ confidence as Brazil heads into the year when it will host the World Cup.

On an annualized basis, the third quarter decline was -1.9 percent, according to data released Tuesday by the Brazilian Institute of Geography and Statistics. But economic performance in the July-September period was 2.2 percent better than the third quarter of 2012 and growth in the gross domestic product for the four quarters ending in September was 2.3 percent.

Initially, the Central Bank had forecast annual growth of 2.7 percent in 2013 but has revised its estimate downward.

The outlook is for continued gradual growth, said Brazilian Finance Minister Guido Mantega. But after the Brazilian economy expanded by a surprising 1.5 percent in the second quarter, Mantega had declared, “We are on course for an economic recovery.”

At the time, he said third quarter growth might be somewhat slower. But the .5 percent drop was the largest quarterly decline since the first quarter of 2009.

In a conference call with journalists Tuesday, Mantega still predicted that Brazil would end the year with higher levels of investment than in 2012.

“We have put into place a large number of concession programs for airports, roads, oil and gas exploration and others that will translate into an upwards trend for investment growth next year,’’ the finance minister said.

On Monday, Brazil signed an agreement with a consortium of oil companies that include Brazil’s Petrobras, France’s Total, Shell of the Netherlands and CNOOC and CNPC — both Chinese state companies — to develop a deep-water oil field in the Santos Basin off the coast of Rio de Janeiro. Brazil is believed to have millions of barrels of oil in its pre-salt reserves but the oil is so deep that getting it out is technically challenging.

“I think Brazil needs to do much more. It’s lost its competiveness,’’ said Marios Maratheftis, Standard Chartered Bank’s global head of macro research, during a visit to Miami last month.

It not only needs more investment, but also reform so it becomes an easier place to do business, he said.

Despite the next year’s World Cup and infrastructure investments associated with the soccer extravaganza, “I think we’ll see Brazil growing below potential,’’ said Mauricio Kehdi Molan, chief economist of Banco Santander in Brazil.

Meanwhile, Mantega said, “We are moving toward a rebalancing of the Brazilian economy with growth led more by investment and less by consumption.”

In the third quarter, government consumption increased by 1.2 percent and household consumption was up by 1 percent.

The ebbs and flows of the Brazilian economy are closely watched in South Florida because Brazil is this region’s top trading partner. Even though overall trade through the Miami Customs District, which includes airports and seaports from Palm Beach to Key West, declined by 2 percent during the first nine months of the year, trade with Brazil was up 4.4 percent, according to an analysis by WorldCity, a Coral Gables research and media company.

Miami district exports to Brazil were up 1.9 percent to $10.23 billion during the first nine months of 2013 and imports were up 17.94 percent to $2.33 billion, allowing Brazil to easily retain its position as South Florida’s top trading partner.

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