Global Cooling Alert: Brazil Headed For Worst Economy Since 1930-1931
For all the debt crises, hyperinflation and boom-and-bust cycles Brazil’s economy has suffered in recent decades, the country hasn’t posted two consecutive years of contraction since the Great Depression.
But if 2014’s fourth quarter was as bad as many economists think and their expectations for this year hold true, Brazil will repeat that feat for the first time since 1930-31.
On Monday, economists polled weekly by Brazil’s central bank downgraded their consensus 2015 forecast to a 0.5% fall in gross domestic product.
And the central bank’s preliminary indicator this month revealed a 0.12% drop in economic activity in 2014, though the Brazilian Institute of Geography and Statistics won’t release official GDP figures for the year until next month.
Finance Minister Joaquim Levy recognized the possibility of a 2014 decline at an event in the New York last week. “We’ve been in a slow patch more recently and we all [feel] that growth has slowed down,” Mr. Levy said in a Feb. 18 presentation to the Americas Society/Council of the Americas. “Maybe last year it was even negative.”
Several factors are weighing on Brazil’s once-dynamic economy.
Growth in China, Brazil’s largest trading partner, has slowed, damaging demand for Brazilian iron ore, soybeans and other commodities and weakening the currency.
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