Brazil tackles technical recession due to falling GDP

The economic activity of Brazil decreased by 0.13% in the second quarter 2019 compared to the first three months of the year, it follows that about at home to a new "technical recession", reported today central bank.

The IBC-Br economic activity index, the precedent of gross domestic product (GDP), fell 0.13% in the second quarter, following a drop of 0.68% in the quarter ending March, reflecting difficulties of Brazil. boost its growth, which has barely exceeded 1% in the last two years, after the serious crises of 2015 and 2016, marked by the collapse of GDP by seven percentage points.

If, at the end of August, the government, through the Brazilian Institute of Geography and Statistics (IBGE), confirmed the decrease of 0.13% recorded between April and June, the country would add two consecutive quarters in negative and which is considered a "technical recession".

The result is framed as expected by financial badysts considering the poor performance certain key sectors for the country, such as Industrial or service.

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The Brazilian economy is also affected by high unemployment, the economic problems of neighboring Argentina and the gloomy prospects for global growth.

In the first quarter of 2019, the GDP of South America's largest economy shrank by 0.2% from the previous period and is expected to increase only 0.8% this year, according to the central bank , the Government, International Monetary Fund (IMF) and agreed market forecasts.

The largest economy in South America began to take off in 2017 and 2018, but in a very weak way, since the growth recorded for each of these years was 1%. For 2019, the first year with the ultra-right Jair Bolsonaro in power, we do not expect a strong GDP expansion either.

The Bolsonaro management announced in July a series of measures that will allow us to inject some US $ 10.5 billion into the economy over the next two years, with the aim of encouraging consumption and accelerating the economy. reprise.

It also promotes a severe pension reform that is in the final stage of its congressional process, as well as a comprehensive plan for privatization of state-owned enterprises and infrastructure concessions.