Econ­omy in re­ces­sion on back of lower con­fi­dence

CityPress - - Business -

Brazil’s econ­omy slipped into re­ces­sion for the first time in more than five years as in­vest­ments con­tracted on lower con­fi­dence be­fore the Oc­to­ber pres­i­den­tial elec­tion.

GDP shrank by 0.6% in the pe­riod from April to June from the pre­vi­ous three months af­ter con­tract­ing a re­vised 0.2% in the first quar­ter, ac­cord­ing to the na­tional statis­tics agency. The con­trac­tion in the sec­ond quar­ter was larger than ex­pected.

Pres­i­dent Dilma Rouss­eff has at­tempted to re­vive growth with tax cuts, bil­lions of dol­lars in credit and higher so­cial spend­ing. With in­fla­tion hov­er­ing around the up­per limit of the tar­get range, con­sumer and busi­ness con­fi­dence eroded in the run-up to the firstround vote on Oc­to­ber 5. It’s the first time the econ­omy con­tracted for two con­sec­u­tive quar­ters since the af­ter­math of the global fi­nan­cial cri­sis in 2008.

“This is the last thing Dilma would have wanted, to­day’s data is the worst-case out­come for her,” said Neil Shear­ing, chief emerg­ing mar­kets econ­o­mist at Cap­i­tal Eco­nom­ics. “This is clearly go­ing to put pres­sure on the cen­tral bank to loosen pol­icy to sup­port growth.”

– Bloomberg

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.