PREVIEW-Brazil economy barely grows in 2nd qtr, but recovery on track -poll

SAO PAULO, Aug 29 (Reuters) - Brazil's economic growth likely slowed to a near halt in the second quarter, a Reuters poll of economists showed on Tuesday, although a pickup in consumer spending suggested a recovery from the worst recession in over 100 years is on track.

Brazil's gross domestic product (GDP) probably grew just 0.1 percent in the quarter from the first three months of 2017 after seasonal adjustments, according to the median forecast of 34 economists.

That is a far cry from the 1.0 percent pace in the first quarter, when a record soy crop and rising automobile exports began to pull Brazil out of a deep and punishing recession.

Forecasts ranged from a 0.3 percent quarterly decline to a 0.7 percent rise, with the most accurate GDP forecaster in recent polls, Banco Santander, expecting no growth at all.

The poll underscored the potential for both disappointment and relief for investors and policymakers when the figures are released on Thursday at 9 a.m. local time (1200 GMT).

A second, if paltry, straight quarter of expansion following eight consecutive declines suggests further slow and steady growth as a series of aggressive interest rate cuts begin to stimulate Latin America's largest economy.

Carlos Kawall, chief economist at Banco J. Safra and a former head of the Treasury Department, said he saw signs of a "more consistent" rebound in economic activity despite the disappointing headline figure as consumer spending picks up.

"For the first time in over a year, we're becoming a bit more bullish towards the economic recovery," he said.

GDP collapsed by 8 percent between the fourth quarter of 2014 and year-end 2016, Brazil's deepest recession since records began to be kept in 1901.

Inflation, which was soaring beforehand, has fallen to its lowest in eight years at a much faster pace than expected, driving policymakers to cut their annual inflation target for the first time in more than a decade.

Brazil's central bank has slashed interest rates by 500 basis points since October, which is finally having some effect, economists said.

Over the last few weeks, major forecasters including JPMorgan and Itaú Unibanco revised their forecasts for GDP higher following a string of surprisingly strong reports from retail sales and economic activity to employment.

But companies are likely to remain reluctant to invest in additional machinery or plants as they grapple with high debt loads and idle capacity.

Capital spending reached a 10-year low in the first quarter and forecasters said it is not likely to pick up anytime soon.

President Michel Temer, who took over in 2016 after his predecessor Dilma Rousseff was impeached for breaking budget rules, has sought to bolster infrastructure investment with a wide-reaching privatization program as well as regulatory reforms.

His efforts to cut government spending, however, are likely to weigh on short-term growth, economists said.

Temer's belt-tightening policies as well as a wide corruption scandal have helped drive his approval rating to the single digits, casting doubt on his ability to gather support for structural reforms including a revamp of the social security system.

Earlier this month, the government loosened its annual budget targets through 2020 as lawmakers refused to back new taxes or spending cuts ahead of the 2018 legislative and presidential elections.

GDP was probably flat on an annual basis, up from a contraction of 0.4 percent in the first quarter, according to the poll. Estimates varied between a contraction of 0.5 percent and an expansion of 0.6 percent. (Editing by Ross Finley and Jeffrey Benkoe)