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Brazil in recession, according to the Central Bank's economic activity index

Thursday, August 20th 2015 - 06:32 UTC
Full article 5 comments
A comparison of the monthly indexes showed the Brazilian economy contracted by 1.89% in the second quarter from the first. A comparison of the monthly indexes showed the Brazilian economy contracted by 1.89% in the second quarter from the first.

Economic activity in Brazil fell more quickly than expected in June, central bank data showed on Wednesday, adding to evidence that the once-booming economy is suffering a painful recession. The Brazilian central bank's IBC-Br economic activity index fell 0.58% in June from the prior month, the bank said in a report released on Wednesday.

 A comparison of the monthly indexes showed the Brazilian economy contracted by 1.89% in the second quarter from the first.

The IBC-Br index, a gauge of activity in the farming, industry and services sectors, is an early indicator of GDP. IBGE, the country's statistics institute, will publish second-quarter economic activity results on Aug. 28.

The Brazilian economy shrank 0.2% in the first quarter as investments fell for the seventh straight quarter. If confirmed by official data, the back-to-back contractions will show what most economists already know: The Brazilian economy has fallen into a deep recession.

A weekly central bank survey of economists published on Monday showed expectations that the Brazilian economy would shrink by 0.15% next year, following a sharp contraction of more than 2% forecast for this year. Brazil has not faced two years of declines since the Great Depression of the 1930s, economists said.

Years of dwindling confidence exacerbated by a growing political crisis and corruption scandal at major state-run companies has dragged down investment and consumption in Brazil.

Categories: Economy, Brazil.

Top Comments

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  • Skip

    Hands up someone who lives in a country that is currently in recession.....

    Not me!

    Aug 20th, 2015 - 09:47 am 0
  • ChrisR

    @ 2 Skip

    Give it a bit of time, you never know.

    Hands up anybody who is surprised that Brazil are in recession.

    No, I didn't think so.

    Aug 20th, 2015 - 06:00 pm 0
  • Skip


    I'll never claim that Australia is recession-proof. Indeed, no country is. Even China which seems to cause people to suspend beliefs and believe in some new economic paradigm.

    Recessions are actually good for a country. The nature of a market economy is that it builds up imbalances during growth and recessions allow these to be rectified and difficult reforms palatable to the population.

    Australia is currently host to an extremely pathetic crop of politicians on both sides of the spectrum. Our long boom has reduced them to squabbling school children because we are prosperous no matter what they do.

    We need a recession to reform.

    However we aren't in one and there is no prospect on the immediate horizon. Which is perplexing when you consider the dominant memes over the last decade:
    1/ the BRICS are on an unstoppable upward trajectory economically and will therefore increase their hard and soft power at the expense of the west and with their youth and dynamism the west will decline.
    2/ Australia's entire prosperity is built and contingent on China. We don't innovate nor are we productive, instead we just dig it up and ship it out. And eventually we will be reduced to a Chinese vassal and powerless to control our own future drowning under the weight of debt.

    The reality is starkly different. The BRICS are all floundering or in recession. Their growth proved to be a bubble that has burst or is deflating rapidly. China's debt load is unbelievable as are its growth statistics. India is still navel gazing with most people unable to find a toilet, while Russia and Brazil are mired in crony capitalism and recession. And with the price of iron, coal and other exports hitting rock bottom, Australia is still managing to grow.

    This isn't the reality that Russians, Indians, Chinese and Brazilians have been ramming down my throat for the past decade.

    The BRICS need major reforms. What's the bet they try to avoid them.

    Aug 20th, 2015 - 11:16 pm 0
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