Brazil’s economy was contracted by 0.3% from January to March compared to the previous quarter, better than expected result, but it comes amid great uncertainty about when the worst recession in decades.
According to official figures released Wednesday, the fall in GDP of Latin America’s largest economy in the first quarter was lower than expected by economists Itau Unibanco, the largest bank deprived of Brazil, which projected a contraction of 0.8%.
Brazil’s GDP is red for five consecutive quarters. The Brazilian Institute of Geography and Statistics (IBGE) reported the fall of the first quarter was 5.4% compared to the same period in 2015, also lower than the forecast 6.1% contraction Itau.
Even better than anticipated, the figures confirm the profound crisis that Brazil spans more than a year ago, amid the plummeting prices of raw materials, an intense political struggle that has removed from power to president Dilma Rousseff and megainvestigación corruption that targets a large part of the political and business elite of this huge country of 204 million people.
“the decline in GDP of Brazil in the first quarter was much smaller than expected but only because of a jump in government spending. with the setting of fiscal policy expected in the second half of the year, this helps the economy will end “, estimated in a report consultancy Capital economics, based in London.
the Organisation for Economic Co-operation and Development (OECD) on Wednesday revised downward its estimates for the Brazilian economy and projected a contraction of 4.3% for 2016 and 1.7 .% by 2017. If these figures are confirmed, Brazil would have its worst recession in a century
the Brazilian market is less pessimistic for a year that already loaded with drag crash 3.8% 2015: the last Focus report published on Monday by the Central Bank in consultation with hundreds of operators, anticipating a fall in GDP of 3.81% this year and growth of 0.55% in 2017.
A State neither large nor small
Rousseff was suspended from office last month while being tried by the Senate for alleged manipulation of public accounts.
was replaced by his former vice president becomes the enemy Michel Temer, whose government began the tumbles with the fall of two ministers accused of wanting to stop the investigation mega fraud to state oil company Petrobras.
But Congress failed to pass a huge primary fiscal deficit 2016 that gives you time to promote pro-market measures such as spending cuts and reform of the pension system with the implementation of a minimum retirement age.
“no longer exists in Brazil space for a swollen state and inefficient. The State that Brazilian society wants is one that offers opportunities for advancement and entrepreneurship, “said Temer Wednesday during the inauguration of new presidents of banks, institutions and state enterprises such as Petrobras.
” The state we want is not large nor small, but a sufficient and “efficient” insisted Temer.
Industry and investments in trouble
From January to March, one of the hardest hit industry was productive sectors, with a contraction of 1.2% compared to the previous three months, and agriculture (-0.3%) and services (-0.2%), said the IBGE.
the household consumption fell 1.7% and investments by 2.7%, but government consumption rose 1.1% and exports grew by a significant 6.5%, while imports fell 5.6%.
unemployment rose to 11.2% between February and April, bringing to 11.4 million the number of unemployed, against 8 million a year ago.
“the industry and investment are sinking to GDP and the interim government should focus on measures” to boost these sectors, told AFP Ignacio Crespo, an expert in macroeconomics Guide Investimentos in Sao Paulo.
“There are many doubts about the government’s ability to overcome economic difficulties and political divisions within the PMDB party in power,” but if the government Temer “can continue to work” with Congress, the recession will end in 2017 with a GDP growth of between 0 and 1%, said the expert.
Rousseff says her innocence and says he is the victim of a “parliamentary coup” engineered by Temer, but if the Senate finally declares guilty this rule Brazil until the intended purpose of its mandate, December 31, 2018.
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