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

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

1855 Slave Brochure Starkly Details Sale of Black Americans

Document lists entire families that were up for sale in New Orleans, offering graphic insight into the slavery trade More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries 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.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs

More Americas News

Tropical Storm Erika Dissipates; 21 Dead

Storm flags over Cuba, could regain strength over Gulf of Mexico; death toll in Dominica, Haiti is 21
More

Video Cubans Embrace New Internet Connectivity Options

Government has approved use of prepaid cards for web access; some foresee construction of better infrastructure, with towers, fiber-optic cables
More

Brazil's Rousseff Faces Growing Impeachment Threat

President’s woes increasing as she now also faces angry rival who controls the possibility of impeachment proceedings against her
More

Cancer, Transplant Patients Rail at Drug Shortages in Venezuela

Currency controls, slumping production and smuggling have caused acute shortages of medical supplies in the socialist-led nation
More

Guatemalan Prosecutors Urge President to Resign Amid Scandal

Government comptrollers' office also issued a statement saying Perez Molina should resign 'to avoid greater social unrest that could have unpredictable consequences'
More

Bolt Sprints to Double Gold in Beijing

Jamaican's victories take place on track where in 2008 he first made headlines by winning Olympic gold medals in record fashion at Bird's Nest Stadium
More