Brazil’s GDP Shrinks, Economy Flirts With Another Recession

Brazil's GDP Shrinks, Economy Flirts With Another Recession 1

BRASILIA (Reuters) – Brazil’s overall economy shrank in the first quarter for the first time since 2016, data showed on Thursday, pressing Latin America’s largest economy nearer to a double-dip recession. The contraction piled pressure on President Jair Bolsonaro, who was swept into office in January after making market-friendly pledges to improve growth and lift the gloom hanging over the economy since a brutal 2015-16 tough economy.

Brazil’s gross home product (GDP) shrank 0.2% from the prior quarter, statistics agency IBGE said, in line with the median estimate in a Reuters poll. The economy grew 0.5% from a season earlier, in line with economists’ forecasts. Although the figures were consistent with forecasts, the economy remains fragile.

Leading signals from April and could, such as consumer self-confidence, bank financing and export data, suggest the economy is still in a funk also. “The signs up to now in the second quarter are that the economy is not recovering,” said Isabela Guarino, chief economist at XP Asset Management in Sao Paulo, who forecast the development of 0 just.1% in the April-June quarter. “But there is a very real risk of contraction, which would take the nationwide country into a specialized downturn.

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It’s not our foundation case, but it’s a rising risk,” she said. Brazil has been in recession five times before 20 years. The last time was 2015-16, one of the worst recessions in the country’s background. The recovery since that time is the weakest on record, according to Alberto Ramos at Goldman Sachs.

Brazilian markets demonstrated little reaction to the data. The Bovespa stock market was 0 up.4% in early trade, the real was steady at 3.9770 per money and the most seriously traded interest futures contracts over the next year were flat to slightly higher. The money has increased and rate anticipations have dropped in recent times sharply.

The central bank’s every week study of around 100 finance institutions showed the common estimation for 2019 GDP development has dropped for 13 consecutive weeks and today stands at 1.2%, down from 2.5% in the beginning of the year. Fixed investment fell 1.7% in the first quarter, industrial output dropped 0.7% and agricultural result dropped 0.5%, IBGE statistics demonstrated. A 1.9% slump in exports and 0.5% rise in imports designed world wide web trade was a pull on development. “The economy is stagnating, but the bias downward is. This season Growth will be near zero,” said Jose Francisco Goncalves, chief economist at Banco Fator in Sao Paulo.

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