2014–2016 Brazilian economic recession

The Brazilian economy has been experiencing an economic recession since early 2014 that has continued into 2016.[1] The economic recession is also coupled with a political crisis in Brazil that has resulted in the impeachment against Dilma Rousseff and widespread dissatisfaction with the current political system. The economy has shrunk by around 4.5% according to the Financial Times by the end of 2015.[2]

Definition

Further information: Economic recession

According to a general economic definition, a recession is a negative economic growth for two consecutive quarters. It is also a business cycle contraction which results in a general slowdown in economic activity. Macroeconomic indicators such as GDP, employment and aggregate demand in Brazil have generally been falling since the first quarter of 2015 and even before, thus fulfilling the requirements for a recession, though not a depression.

Unemployment

Before the recession, Brazil's unemployment rate fared around 6.8% for most of 2014 and has been generally increasing since February 2015, averaging 8.5% in that same year. Latin America’s largest economy has lost more than 1.5 million jobs throughout 2015, thus fueling public discontent against the political establishment and the political leadership of the Worker's Party and the president Dilma Rousseff, according to bloomberg.[3] The unemployment rate is expected to rise throughout the rest of 2016 at the same time GDP is falling.

Budget deficit

Brazil is currently experiencing a fiscal crisis, and an increasing budget deficit, which, according to Bloomberg, has been "the largest-ever primary budget gap "..."as a two-year economic recession sapped tax collection while expenses grew further."[4] The government deficit has reached 5.8 billion reais (U$1.7 billion) during the first three months of 2016, the widest reported since December 2001. The two-year long recession can be explained by the decrease in government revenue from taxes, caused by the recession, while expenses from government have been growing constantly.[5]

Credit rating

This is a table of contents of the credit ratings of the Brazilian economy according to Trading Economics.

Agency Rating Outlook Date
Fitch BB negative May 5, 2016
TE 34 negative Apr 16 2016
Moody's Ba2 negative Feb 24 2016
S&P BB negative Feb 17 2016

Inflation

...

References

  1. ↑ Barua, Akrur (29 April 2016). "Brazil: Yearning for the good times". Global Economic Outlook, Q2 2016. Deloitte University Press. Retrieved 21 May 2016.
  2. ↑ "Brazil's economy shrinks by record 4.5%". Financial Times. Retrieved 18 May 2016.
  3. ↑ "Brazil's unemployment jumps in 2015, adding to rousseff's woes". bloomberg.
  4. ↑ "Brazil posts largest budget deficit for february ever". Bloomberg. Retrieved 18 May 2016.
  5. ↑ "Brazil records worst ever first quarter budget deficit". Bloomberg. Retrieved 18 May 2016.
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