RIO DE JANEIRO, Aug. 29 (UPI) — Brazil’s economy has entered a recession, according to the country’s most recent gross domestic product report.
This is the most significant economic downturn for the South American nation since the global recession of 2008 and 2009.
The Brazilian Institute of Geography and Statistics said Friday the country’s GDP declined 1.9 percent between April and June. Between January and March, it shrank .7 percent, placing the economy into the definition of recession.
Due to in-country corruption investigations in several sectors and a steep decline in consumer confidence, Wall Street Journal reports the country experienced its most significant quarterly decline in private consumption in 14 years.
“Pretty much everything is turning down,” chief emerging market economist at Capital Economics Neil Shearing told CNN.
The economic downturn in 2008 was a global one, whereas Brazil’s current issue is largely based on domestic affairs and direct trade relations with China. Recovery is therefore expected to be slow.
Brazil, after a decade of robust exports to China, has been hit by the slowdown in the Chinese economy. Further, Brazil’s state-run oil company, Petrobras, is in a massive corruption scandal after losing billions of dollars to graft. The plummeting price of oil, along with declining prices for other key commodities like sugar and coffee, also contribute to the country’s financial woes.
Brazil’s currency, the real, has also reportedly lost a quarter of its value just this year.
“The vast majority of Brazil’s problems were created at home, with the interventionist policy, the growth of the state, the lack of reform,” Edwin Gutierrez, Aberdeen Asset Management emerging market manager told the Journal.
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