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

Captured IS Militants Explain Why They Fought

Fighters from Turkey, Syria tell VOA Kurdish Service what drew them to extremism, jihad More

Security Experts Split on Kenyan Barrier Wall

Experts divided on whether initiative aiming to keep out al-Shabab militants is long-awaited solution or misguided effort More

Video Philippines Wants Tourists Spending Money at New Casinos

Officials say they hope to turn Manila into the next Macau, which has long been Asia’s gambling hub 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.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

More Americas News

US, Cuba Teams Discuss Telecommunications Issues

US delegation visited Cuba this week as the two nations continued efforts to restore diplomatic relations broken over 50 years ago
More

Egyptian Court Adjourns Trial of Al Jazeera Journalists to April 22

Two journalists are charged with aiding a terrorist organization, a reference to the Muslim Brotherhood, which Egypt banned following 2013 army takeover
More

Rio Exhibition Dramatizes Olympian Bay Cleanup Task

Display highlights problem of trash in Guanabara Bay, where sailing, windsurfing events are to take place in next Summer Games
More

Chile Says Drought Permanent, Lays Out Water Plan

President Michelle Bachelet says government will invest in desalinization plants and reservoirs to ensure access to potable water
More

Poll: Venezuelan Leader's Popularity Inches Up to 25%

Rise comes after United States declared Venezuela a security threat and ordered sanctions against seven officials
More

High Winds, Drought Feed Chilean Forest Fires

Blazes have ravaged swaths of China Muerta and Nalca Lolco reserves and Conguillio national park, revered for its ancient forests
More