Brazil economy back to 2009 size after record 9.7% slump in second quarter By Reuters

Brazil economy back to 2009 size after record 9.7% slump


© Reuters.

By Jamie McGeever

BRASILIA (Reuters) – 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%.

Carlos Kawall, director at ASA Bank and a former treasury secretary, said Brazil’s economy is unlikely to grow back to where it was 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, adding that he is revising down 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.

“High frequency indicators show that activity continues to recover. However, for the rebound to be consistent, it is important to continue the structural reform and fiscal consolidation agenda,” it said in a statement.

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

The downturn in the April-June period was steeper than economists had expected. The median estimates in a Reuters poll of economists were for a 9.4% fall on the quarter and an annual decline of 10.7%.

The value of Brazil’s GDP at current prices was 1.65 trillion reais ($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.

($1 = 5.40 reais)

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME