Brazil’s economic slowdown is turning out to be as bad as many feared it would be, the Financial Times reports:
Brazil’s economy officially slipped into recession in the second quarter as high inflation, plummeting consumer confidence and a roiling corruption scandal led gross domestic product to contract 1.9 per cent from the previous quarter.
The figure was even worse than economists had expected and was compounded by a big downward revision of first quarter data from a 0.2 per cent reduction in GDP to a 0.7 per cent decline.Compared with the second quarter of last year, the economy has shrunk 2.6 per cent, the Brazilian Institute of Geography and Statistics said on Friday. After two consecutive quarters of negative growth, officials said the economy was formally in recession.
China’s slowdown drags heavily on Brazil, a country whose basic strategy for ten years has been to ride the Chinese tiger.
Meanwhile, the recession hits when the government is paralyzed. President Dilma Rouseff is at 8 percent in the polls, threats of impeachment are swirling, and the biggest corruption scandal in Brazilian history has dozens of politicians, including two ex-presidents, leaders of two of the three most important parties, and top congressional leaders, worried that they are going to jail.