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Brazilian economy is back to 2009 size, following a 11,4% contraction in the second quarter

Wednesday, September 2nd 2020 - 09:45 UTC
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The magnitude of the slump was huge: industry fell 12.3%, services 9.7%, fixed investment 15.4%, household consumption 12.5% and government spending 8.8%. The magnitude of the slump was huge: industry fell 12.3%, services 9.7%, fixed investment 15.4%, household consumption 12.5% and government spending 8.8%.

Brazil’s economy shrank in the second quarter by the most on record as anti-coronavirus lockdown measures slammed activity in almost every sector, dragging Latin America’s largest economy back to the size it was in 2009.

The pandemic triggered a 9.7% fall in gross domestic product from the prior quarter, government statistics agency IBGE said on Tuesday, and an 11.4% decline compared with the same period last year.

The magnitude of the slump in activity across the economy in the second quarter was huge: industry fell 12.3%, services 9.7%, fixed investment 15.4%, household consumption 12.5% and government spending 8.8%.

Household consumption, which accounts for two-thirds of all economic activity in Brazil, was a particularly heavy drag, IBGE said. Only agriculture expanded in the quarter, by 0.4%.

Brazil’s economy is now 15% smaller than it was at its peak in 2014. Carlos Kawall, director at ASA Investments and a former treasury secretary, said Brazil’s economy is unlikely to grow back to where it was just last year until 2023.

“It’s a horrible period for the economy. From the standpoint of the economy, social implications, and unemployment, it has been a disaster,” he said, revising downward his 2021 growth forecast to 2.1% from 2.7% due to uncertainty about the labor market and consumption outlook.

The economy ministry was more upbeat, noting that many of Brazil’s emerging market peers posted larger GDP contractions in the second quarter and that the outlook for this year has been brightening in recent weeks.

Economy Minister Paulo Guedes said the Q2 figures were a “distant sound, the sound of the pandemic’s impact back then,” and that the economy has begun a “V-shaped” recovery.

But economists at Goldman Sachs and Citigroup cut their 2020 GDP forecasts to -5.4% form -5.0%, and to -6.5% from -6.0%, respectively.

The government’s current forecast is for a 4.7% contraction this year, which would still be the largest annual fall in records dating back to 1900. The average forecast in a weekly central bank survey of economists is for a 5.3% decline.

The value of Brazil’s GDP at current prices was 1.65 trillion reais (US$ 306 billion) in the second quarter, IBGE said. IBGE also revised the January-March figures to a 2.5% fall in GDP from the initial estimate of a 1.5% decline.

Categories: Economy, Politics, Brazil.

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  • Chicureo

    Pugol-H — The Exalted Prince of Colonia Nervia Glevensium and THE thinking woman's heartthrob from the dark continent

    Jack Bauer — Admirer of Dionysus and slayer of criminal mendacious idiots

    It was again mesmerizing to follow ma enchanteresse, in her form-fitting Bogner suit, elegantly schuss her way down the slopes today. (Buying this apartment has been really satisfying for us.)

    Yet, we are somehow surviving here — despite our wine supplies dwindling low and we're completely out of pâté foie gras. (...quelle horreur!)

    Today's le déjeuner was last night's thinly roasted pork leftovers on fresh sourdough baguettes with goat cheese. Tonight we're having Japanese tempura — consisting of giant Ecuadorian prawns, salmon, and a wide array of vegetables including sweet red onions and artichoke hearts. (The secret is the batter, the quality of the oil and the skill of the preparer.)

    Its the final night with our vivacious guest and we'll easily go through a few bottles of Valdivieso's finest champenoise — as we also have two of our daughter's invited feminine guests. (Perhaps too many women...)

    Tomorrow, our other daughter arrives with her husband and children and the fun continues — including the planned evening's fare of hamburgers:

    After this coming week, we'll need to return to the farm for preparing the Independence Day celebrations on the 18th — and to avoid the authorities shutting us down, we've formally certified the day as a worker's seminar on workplace safety and actually have a legal permit allowing so. (Officially we're not having a party, but an authorized business function instead.) This pandemic will not destroy our annual asado.

    Our expected next snowfall is Tuesday — I sincerely hope your Summer is progressing enjoyably as well.

    ¡Saludos de 3000mt!

    Sep 03rd, 2020 - 09:22 pm 0
  • Terence Hill

    Chicureo Pervert, Psychological Transferee, Malignant Narcissist, Criminal Libeller, & Spam King
    “Is solely a piece of poo” Say's the 'hick from, the sticks' I guess that must have been your substitute for Play-Doh as a kid, which is why you have such fond memories of it.
    “But that ... blocking your intestines will be free consuming Avocados”
    That can't possibly be true as you're still full of shit.
    “The criminal promoter of the murder of healthy full-term babies.”
    No proof, no truth, failure to meet your burden of proof, condemns you as one of two of biggest liars on this site.

    Sep 08th, 2020 - 03:54 pm 0
  • Chicureo

    (Continuing on a previous closed news-item)

    Jack Bauer — Admirer of Dionysus and slayer of mindless mendacious fools

    Pugol-H — The Exalted Prince of Colonia Nervia Glevensium and the thinking woman's heartthrob from the dark continent

    We've become very relaxed skiers as we started mid-day on the slopes, and finished early in this afternoon. Roughly four solid hours with almost no lift waits — the snowpack remains outstanding!

    We've now returned to the apartment and ma trois femmes immediately opened a bottle of Valdivieso champenoise and quickly assembled a wonderful charcuterie platter of cheeses, smoked ham, roasted honey-pecans, our farm's Flame seedless raisins and a sliced sourdough garlic-butter baguette.

    Tonight's fare consists of our daughter-in-law's Senfbraten (porkroast with Bavarian mustard sauce) baked with sweet red onions and partially rehydrated apricots with roasted small purple Andean potatoes — also a red Belgian endive salad to follow with crema catalana for dessert.

    I'm pairing all this with a wonderful '09 Viña Montes Alpha Purple Angel Carménère — but it looks like we'll be opening another bottle of champenoise in a few minutes, because mas compagnes are into a celebratory mood.

    The Montes winery produces some of the really great wines of Chile:

    Our attractive guest brought me a bottle of Millakorü single malt Araucanian whisky produced in the Bio Bio Valley (4 years oak aged — Grade 46) which I'll open after dinner. (I've never tasted Chilean whisky in my life, so it should be interesting.)

    Life is quite good at this moment, so I won't waste my time Terence Hill on the criminal promoter of the murder of healthy full-term babies. (Yesterday, he was busy being suspiciously interrogated by his probation officer.)

    ¡Saludos desde Chile!

    Sep 03rd, 2020 - 01:04 am -1
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