Brazil’s Recession Deepens in Q2

The Brazilian economy shrank 1.9 percent on quarter in the three months to June, much worse than market expectations and following a downwardly revised 0.7 percent contraction in the first quarter. It is the worst performance since the last quarter of 2008, as a rise in exports was not able to offset a slump in private consumption and investment.

Gross fixed capital formation fell 8.1 percent, eighth straight quarter of decline. Household consumption dropped 2.1 percent while government spending went up 0.7 percent. Exports rose 3.4 percent and imports fell 8.8 percent. 

On the production side, industrial production fell 4.3 percent, led by a drop in construction (-8.4 percent), manufacturing (-3.7 percent) and electricity, water, gas and sewerage (-1.5 percent). In contrast, mining production went up 0.3 percent. The services sector contracted 0.7 percent, driven by lower internal trade (-3.3 percent), transportation (-2 percent), information (-1.3 percent) and financial intermediation and insurance (-0.2 percent) while real estate activities rose a meager 0.3 percent. In addition, agricultural production decreased 2.7 percent. 

Figures for the first quarter of 2015 were revised to show 0.7 percent contraction instead of a 0.2 percent drop initially reported. 

Year-on-year, the economy shrank by 2.6 percent, fifth straight period of contraction.

Brazil’s Recession Deepens in Q2

Joana Taborda |
8/28/2015 2:25:16 PM