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

Turbulent Transition Imperils Tunisia’s Arab Spring Gains

Critics say new anti-terrorism laws worsen Tunisia's situation while others put faith in country’s vibrant civil organizations, women’s movement More

Burundi’s Political Crisis May Become Humanitarian One

United Nations aid agencies issue warning as deadly violence sends tens of thousands fleeing More

Yemenis Adjust to Life Under Houthi Rule

Locals want warring parties to strike deal to stop bloodletting before deciding how country is governed 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.
Texas Town Residents Told to 'Just Leave' Ahead of Flood Threati
X
Greg Flakus
May 29, 2015 11:24 PM
Water from heavy rain in eastern and central Texas is now swelling rivers that flow into the Gulf of Mexico, threatening towns along their banks. VOA’s Greg Flakus visited the town of Wharton, southwest of Houston, where the Colorado River is close to cresting.
Video

Video Texas Town Residents Told to 'Just Leave' Ahead of Flood Threat

Water from heavy rain in eastern and central Texas is now swelling rivers that flow into the Gulf of Mexico, threatening towns along their banks. VOA’s Greg Flakus visited the town of Wharton, southwest of Houston, where the Colorado River is close to cresting.
Video

Video New York's One World Trade Center Observatory Opens to Public

From New Jersey to Long Island, from Northern suburbs to the Atlantic Ocean, with all of New York City in-between.  That view became available to the public Friday as the One World Trade Center Observatory opened in New York -- atop the replacement for the buildings destroyed in the September 11, 2001, attacks.  VOA’s Bernard Shusman reports.
Video

Video Seoul Sponsors Korean Unification Fair

With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Purple Door Coffeeshop: Changing Lives One Cup at a Time

For a quarter of his life, Kevin Persons lived on the street. Today, he is working behind the counter of an espresso bar, serving coffee and working to transition off the streets and into a home. Paul Vargas reports for VOA.
Video

Video Modular Robot Getting Closer to Reality

A robot being developed at Carnegie Mellon University has evolved into a multi-legged modular mechanical snake, able to move over rugged surfaces and explore the surroundings. Scientists say such machines could someday help in search and rescue operations. VOA’s George Putic reports.
Video

Video Shanghai Hosts Big Consumer Electronics Show

Electronic gadgets are a huge success in China, judging by the first Asian Consumer Electronics Show, held this week in Shanghai. Over the course of two days, more than 20,000 visitors watched, tested and played with useful and some less-useful electronic devices exhibited by about 200 manufacturers. VOA’s George Putic has more.
Video

Video Forced to Return Home, Afghan Refugees Face Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.

VOA Blogs

More Americas News

Video Havana Welcomes US Decision to Remove Cuba From Terror List

Move brings two Cold War adversaries step closer to re-establishing diplomatic relations that were severed more than 50 years ago
More

Video FIFA's Blatter Defiant About US Corruption Probe

Newly re-elected FIFA president questions timing of US corruption investigation, says he is victim of 'hate' on part of European soccer's governing body UEFA
More

Venezuela Blocks Former LatAm Presidents From Seeing Detained Leaders

Andres Pastrana of Colombia, Jorge Quiroga of Bolivia, both political conservatives, not allowed to meet opposition leader Leopoldo Lopez and former Mayor Daniel Ceballos
More

Haiti Struggles to Stem Cholera as Rains Come Early

From January to April this year, 14,226 Haitians infected with cholera - triple the number of cases from the same period last year, with Port-au-Prince hardest hit
More

Cuba Not Off Hook, Despite Removal From US Terror List

Though it's off blacklist, Havana is not clear of all US embargoes and statutory restrictions
More

Nazi War Crimes Suspect Dies in Canada

Vladimir Katriuk, 93, had denied allegations that he took part in killings of civilians in Soviet village of Khatyn, now part of Belarus
More