Jun 3, 2016
Brazil dives deeper into recession
Jun 3, 2016
For the fifth consecutive quarter, the Brazilian economy, the largest in South America has shrunk.
According to government figures released on Wednesday Brazil's economy shrank 5.4 per cent in the first quarter of this year.
The news comes with Brazil only two months away from hosting the Olympics in Rio de Janeiro amidst a massive political turmoil.
In May, President Dilma Rousseff was temporarily suspended by a congressional impeachment vote. Her vice president, Michel Temer, has taken over as interim president.
Production fell in all the three main economic sectors: agriculture, industry and services.
Exports were a rare bright spot, increasing by 6.5 per cent compared with the fourth quarter after a sharp fall in the value of the real. Brazil is a major supplier of cotton and petrochemicals.
Experts had forecast Brazil's economy to shrink more than it did. The better-than-expected number reflected a last ditch effort by Rousseff to win over public support by increasing government spending in April prior to the vote.
Brazil is in its longest recession since the 1930s. Inflation has spiked up, consumer confidence has plummeted and a massive corruption scandal continues to engulf public officials two years since it first began.
Unemployment in Brazil had shot up to 11.2 per cent in the period between April and February. There are 11.4 million unemployed Brazilians, up nearly 20 per cent from a year ago.
Brazil's recession began at the beginning of 2015 as prices of commodities -- its main engine of growth -- crashed, and the corruption scandal at the state-run oil company, Petrobras, engulfed politicians of all stripes and many business owners.
Brazil's central bank estimated in March that the economy would shrink 3.5 per cent this year. Last year, Brazil's economy contracted by 3.8 per cent.
According to the Organisation for Economic Cooperation and Development (OECD), the Brazilian economy is expected to contract by 4.3 per cent this year.
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