Brazil Officially in Recession
The economic news has been poor in Brazil for a while now, and with the release of new GDP figures the country is officially in recession, the BBC reports:
Brazil has entered recession after official figures showed the country’s economy contracted by 1.9% between April and June compared with the previous three months.
Analysts had expected a contraction, but the number was worse than expected.
First quarter output was also revised down to show a 0.7%, rather than a 0.2%, contraction.
Other problematic numbers include:
High interest rates – currently 14.25% – have also affected consumer spending, an important element of Brazil’s economy, while this year, the government has introduced stringent austerity measures designed to tackle high levels of debt.
In the second quarter, household spending fell by 2.1% compared with the previous three months. The biggest falls came in the industrial sector, where construction output fell 8.4%
Unemployment has risen rapidly, while inflation over 12 months is running above 9% – twice the government’s target.
And the problems in China are likely to make thing worse, given that China is a major customer for Brazilian commodities.