12/1/2015

Brazilseconomyshrinksbyrecord4.5%FT.com

December1,20151:58pm

Brazilseconomyshrinksbyrecord4.5%
JoeLeahyinSoPaulo

Share

Author alerts

Print

Clip

Comments

AFP

Blackvultures(urubu)standonafootballgoalonBotafogobeach,withtheSugarLoaflandmarkonthebackgroundinRio
deJaneiro

Brazilsgrossdomesticproductfellbyarecord4.5percentyearonyearinthethirdquarter,
confirmingfearsthatLatinAmericaslargestcountryisontrackforitsworstrecessionsincethe
GreatDepression.
Lowercommodityprices,fiscalcontractionandthefadingofaconsumercreditboomhavebattered
whatwasonceoneoftheworldsfastestgrowingeconomies.
BrazilhasalsotakenahitfromthesweepingCarWashinvestigation
intocorruptionatPetrobras,thestateownedoilcompany,whichhasparalysedcongressandthe
corporatesector.
http://www.ft.com/cms/s/0/d2d7e33e982c11e5bdda9f13f99fa654.html#axzz3t8K6aHC9

1/4

12/1/2015

Brazilseconomyshrinksbyrecord4.5%FT.com

Thescandalhasalsobeguntospreadtothefinancialservicesindustry,withthearrestlastweekof
billionairebankerAndrEsteves,chiefexecutiveofinvestmentbankBTGPactual.
Brazilsstatisticsagency,theIBGE,saidonTuesdaythatGDPinthethreemonthstoSeptemberfell
1.7percentagainstarevisedsecondquarter,worsethananalystsexpectations.Theyearonyear
fallwasthebiggestsincethestartofthehistoricaldataseriesin1996,theIBGEsaid.
Theslowdownisgeneratingaperfectstormofnegativeeconomicdata.Unemploymentroseto7.9
percentinSeptember,upfrom4.7percentinOctoberlastyear,inflationisrunningatmorethan
10percentforthefirsttimesince2002andBrazilsgovernmentbudgetdeficitisnowat9.5per
centofgrossdomesticproduct.
ThepoorGDPfigurespilemorepressureonBrazilsleftleaningpresident,DilmaRousseff,whois
tryingtoimplementfiscalausteritymeasureswhilebattlinglowapprovalratingsandcallsforher
impeachmentinCongress.
ItseemslikelythatGDPwillfallbysomethinglike3.5percentthisyear[ratherthanthe2.5per
centwehadexpected],CapitalEconomics,aLondonbasedresearchhouse,saidinanote.
WhileBrazilsproblemsarelargelyofitsownmaking,itisnottheonlybigemergingeconomyto
sufferfromtheendofthecommoditiessupercycleandslowinggrowthinChina.
Russiaisexperiencingitsfirstrecessionsince2009amidlowoilpricesandwesternsanctions
imposedovertheKremlinsroleintheUkrainecrisisalthoughofficialssaytheeconomywill
returntogrowthnextyear.
WorryinglyforBrazilspolicymakers,thedeclineswereacrosstheboard,withagriculture
contracting2.4percentcomparedwiththepreviousthreemonthswhileindustryfell1.3percent
andservicesdropped1percent.
Householdconsumptionfell1.5percentandgrossfixedcapitalformation,orinvestment,wasdown
4percentduringthethreemonths.
TheIBGEsaidthefallinagriculturewasduetoweakharvestsforseveralcommoditiesthat
normallyperformstronglyduringthethreemonthstotheendofSeptember,includingcoffee,sugar
cane,oranges,cottonandwheat.Forestryandcattlehusbandryalsoperformedweakly.
Theeconomyhasnotfoundabottomyet,saidBancoMizuhodoBrasilchiefstrategistLuciano
Rostagno,whoisalsopredictinga3.5percentdropthisyear.

http://www.ft.com/cms/s/0/d2d7e33e982c11e5bdda9f13f99fa654.html#axzz3t8K6aHC9

2/4

12/1/2015

Brazilseconomyshrinksbyrecord4.5%FT.com

Thetradebalancemadeapositivecontributiontogrowthbutthiswasmostlyduetoacrashin
importsofnegative20percentquarteronquarterratherthanalargeincreaseinexports,which
grewonly1.1percentquarteronquarter,MrRostagnosaid.
Therearefewsignsthatthingswillgetmuchbetterinthefinalmonthsofthisyear.
Theonlyhope[forthebrave]isthatthingshavebeensobadthisyearthattheycantgetmuch
worsein2016.Indeed,therearesignsifyousquintthatthecollapseininvestmentisstartingto
ease,saidCapitalEconomics.
RELATEDTOPICS

Share

Brazil economy, Central Banks

Author alerts

SyriavoteshowsLaboursdeep
divisions

Print

Clip

FirstFTParisclimate
pledges,UKtoapproveSyria
strikes

PROMOTEDCONTENT
http://www.ft.com/cms/s/0/d2d7e33e982c11e5bdda9f13f99fa654.html#axzz3t8K6aHC9

Comments

FirstFTClimatetalks,
migrantdeal

PromotedByZurich

3/4

12/1/2015

Brazilseconomyshrinksbyrecord4.5%FT.com

BuildingresilienceiskeytoAfricasfuture
Africahasmaderemarkableprogressonarangeofsocialandeconomicmetricsinrecentyears,
butthereisstillmuchworktobedoneindevelopingthecontinentsresiliencetoregionallyand
globallyinterconnectedrisks.
TheWorldBankreportsthat... Seemore

VIDEOS

Explore the Financial Times

600
Journalists

Times, news and analysis for global Martin

decision
Wolfmakers.Gideon Rachman
Working to
Chief
economics
Chief foreign affairs
eeks of access for
$1. insights
provide
for you to act on

commentator

Global news for decision

makers...

columnist

Lucy Kellaway
Management
columnist

Find out more >

Printedfrom:http://www.ft.com/cms/s/0/d2d7e33e982c11e5bdda9f13f99fa654.html
Printasinglecopyofthisarticleforpersonaluse.Contactusifyouwishtoprintmoretodistributetoothers.

THEFINANCIALTIMESLTD2015FTandFinancialTimesaretrademarksofTheFinancialTimesLtd.

http://www.ft.com/cms/s/0/d2d7e33e982c11e5bdda9f13f99fa654.html#axzz3t8K6aHC9

4/4