News / Americas

Brazil Enters Recession in Pre-election Blow to Rousseff

Presidential candidate and Brazilian President Dilma Rousseff of Workers' Party (PT) speaks during the first television debate at the Bandeirantes TV studio in Sao Paulo, Aug. 26, 2014.
Presidential candidate and Brazilian President Dilma Rousseff of Workers' Party (PT) speaks during the first television debate at the Bandeirantes TV studio in Sao Paulo, Aug. 26, 2014.
Reuters

Brazil suffered a recession in the first half of the year as investment plunged and the country's hosting of the World Cup suffocated economic activity, a major blow to President Dilma Rousseff's already diminishing hopes for reelection in October.

Latin America's largest economy has suffered stagnant growth for more than three years under Rousseff's left-leaning policies, which have dented consumer and business confidence and caused heavy losses for financial investors.

People look at a list of job offers posted in a main street in downtown Sao Paulo, Aug. 13, 2014.People look at a list of job offers posted in a main street in downtown Sao Paulo, Aug. 13, 2014.
x
People look at a list of job offers posted in a main street in downtown Sao Paulo, Aug. 13, 2014.
People look at a list of job offers posted in a main street in downtown Sao Paulo, Aug. 13, 2014.

The economy took an even bigger downturn in the second quarter, contracting 0.6 percent from the first quarter, according to government statistics agency IBGE. The agency also revised down its estimate for first quarter activity to a 0.2 percent contraction, meaning the economy entered a recession.

News of the recession, Brazil's first since the global financial crisis of 2008-09, will give a powerful weapon to Rousseff's opponents in the Oct. 5 election at precisely the moment that her candidacy is at its most vulnerable.

Polls over the last week have shown Rousseff falling behind centrist candidate Marina Silva in the event of a second-round runoff, which appears likely. Silva and the other main candidate, Senator Aecio Neves, have hammered Rousseff for being weak on inflation and ruining the economic momentum that made Brazil a Wall Street darling last decade.

Civil construction and manufacturing especially suffered during the second quarter, data showed. Brazil hosted the World Cup in June and July, which caused a slowdown at many factories and retailers as cities declared public holidays on game days to prevent logistical problems such as heavy traffic.

Yet economists said Brazil's problems go beyond any short-term considerations such as the Cup. They blamed government policies that have relied too much on stimulating domestic demand while failing to attract investment.

They said the data underscored that the next president - whoever it may be - would need to undertake deep reforms.

“The recovery from here will be slight,” said Eduardo Velho, chief economist at INVX Global, an investment fund in Sao Paulo. “We need a new economic program based on fiscal tightening, monetary flexibility, and improvements in productivity.”

Investment plummeted 5.3 percent in the second quarter compared to the previous quarter, its worst performance since early 2009. Industry also suffered its fourth straight quarterly decline, down 1.5 percent.

Following the data, some economists said they would revise down their forecasts for full-year economic growth to zero.

Rousseff has blamed the slowdown on continued economic weakness abroad, such as in Southern Europe.

The second quarter contraction was worse than expectations of a 0.4 percent contraction, according to the median forecast of 47 analysts polled by Reuters.  

You May Like

Sydney Hostage-taker Failed to Manipulate Social Media

Gunman forced captives to use personal Facebook, YouTube accounts to issue his demands; online community helped flag messages, urged others not to share them More

UN Seeks $8.4 Billion to Help War-Hit Syrians

Effort aimed at helping Syrians displaced within their own country and those who've fled to neighboring ones More

Who Are the Pakistani Taliban?

It's an umbrella group of militant organizations whose objective is enforcement of Sharia in Pakistan 'whether through peace or war' More

This forum has been closed.
Comment Sorting
Comments
     
by: Not Again from: Canada
August 29, 2014 2:56 PM
Socialist policies, bordering on comunism, have never produced any good economic results. Rousseff's Brazil had very much aligned itself with the other downward spiralling socialist, like Venezuela, Cuba, Bolivia.... all of them very much in an economic failure mode; and courting the likes of Iran and Russia, makes investors really run away. Who would invest any money? in countries that do not respect private property, nor do they provide clear gurantees on investments and corporate security.
Many of the Latin American countries' leaders are stuck in the era of Fidel and Che, whom they romanticize and somehow see as having provided for a path of economic self sustenance an a better future for their people, none of it occurred, it is a myth that grows amongst South American leftists.
One of the worse sitiations observed, as of late, is Chile; once a country that was an economic beacon of development and meeting the needs of its people, now with Bachelet once again at the helm, she is leading the contry into the usual socialist downward spiral; Chile is rapidly sinking into the state it was during the Allende years 50+ years ago; soon it will be like Venezuela.
Brazil will be better if it provides a good climate for investors, and people get back to work; given the massive numbers of young people in Brazil, if its economy is not set on a solid growth path of 8%+ growth, Brazil will become a destabilized broken country; already law and order/security are near collapse in many parts of the country, especially the big cities, and bandits once again roam the countryside and its highways.
Maybe Silva will set a new course for Brazil, out of its troubling economic downturn, it will be very challenging, because the downward spiral has a significant amount of negative momentum; many policies and controls will need to be rescinded or changed, very tough days ahead can be predicted for Brazil.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Putin: Russian Economy to Rebound in 2 Yearsi
X
December 18, 2014 5:13 PM
Russian President Vladimir Putin held his annual end-of-the-year news conference Thursday, tackling questions on the Russian economy, the crisis in Ukraine and Russian relations with the west. VOA's Jeff Custer reports.
Video

Video Putin: Russian Economy to Rebound in 2 Years

Russian President Vladimir Putin held his annual end-of-the-year news conference Thursday, tackling questions on the Russian economy, the crisis in Ukraine and Russian relations with the west. VOA's Jeff Custer reports.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video Will Pakistan School Shooting Galvanize Pakistan Against Extremism?

The attack on a military school in Pakistan’s northwest city of Peshawar left 141 dead, including 132 children. Strong statements of condemnation poured in from across the world. The country announced three days of mourning, and the leadership, both political and military, promised retribution. VOA's Ayesha Tanzeem looks at how likely the Pakistani government is to clamp down on all extremist groups.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video Turkey's Authoritarianism Dismays Western Allies

The Turkish government has been defiant in the face of criticism at home and abroad for its raids targeting opposition media. The European Union on Monday expressed dismay after President Recep Tayyip Erdogan lashed out at Brussels for criticizing his government's action. Turkey's bid to be considered for EU membership has been on hold while critics accuse the NATO ally of increasingly authoritarian rule. Zlatica Hoke reports.

All About America

AppleAndroid

More Americas News

US Expects January Talks With Cuba

Meeting, that was originally a periodic review of Cuba-US migration, will now include talks on restoring diplomatic relations
More

Brazil's Rousseff Pledges to Tighten Operations at Petrobras

She urges Brazilians not to lose faith in oil producer, which is mired in a corruption scandal
More

US-Cuba Trade Could Grow Significantly

Analysts say US exports to Cuba could eventually hit $5.9 billion annually, while Havana's exports to the US could reach $6.7 billion
More

UK Gives Falklands Medal for Argentine War Role

Announcement likely to anger Argentine government, which claims islands as its own
More

Vatican Mediation in US-Cuba Relations Applauded

Statement confirmed that Vatican diplomats facilitated talks between two countries, 'resulting in solutions acceptable to both parties'
More

Latin America Welcomes Obama's Move to Restore US-Cuba Ties

Regional leaders say initiative would further ease ideological battle that has divided Americas for decades
More