Brasilia, Aug 28 (IANS/EFE) Second-quarter GDP figures released on Friday confirmed that the Brazilian economy has entered a recession.
Gross domestic product in Latin America’s largest economy fell in both the first and second quarters, meeting the technical definition of a recession.
The economy shrank 1.9 percent in April-June compared with the previous three months and by 2.6 percent in comparison with the second quarter of 2014, the Brazilian Institute for Geography and Statistics said.
GDP fell 2.1 percent overall in the first half of this year and was down 1.2 percent over the 12 months ending June 30.
The sharper-than-expected contraction in the second quarter can be attributed to an 8.1 percent plunge in investment and a drop of 2.1 percent in consumption.
The Brazilian government budget went into the red last year for the first time in more than a decade, prompting President Dilma Rousseff’s administration to cut spending, increase taxes and restrict access to credit.
Those measures have combined with rising inflation, tight money and a general loss of confidence in the economy to drive down both investment and consumption.
By sectors, Brazilian industrial output between April and June was 4.3 percent lower than the previous quarter, agriculture shrank 2.7 percent and services contracted 0.7 percent.
Brazil’s GDP grew only 0.1 percent last year, following growth of 2.7 percent in 2013 and 1 percent in 2012.
The government estimates the economy will retreat 1.49 percent this year, while private sector analysts say the decline will be closer to 2.06 percent.