SÃO PAULO
Brazil has been in a recession since the second quarter of 2014, the longest period of recession since 1999, a group of economists said Wednesday.
The Committee of Economic Cycles, a team of economists at the well-respected Fundação Getulio Vargas economic institute, said the country’s economy has contracted for at least four consecutive quarters. The 1999 recession lasted five quarters.
“The recession will continue into 2016,” Rodrigo Zeidan, associate professor of economics and finance at Brazil’s Fundação Dom Cabral business school told Anadolu Agency.
“This (the recession) is combination of factors: the drop of external and domestic demand, fall in productivity and the currency crash,” he added. Brazil’s currency, the real, is currently at a 12-year low against the dollar at 3.50 real.
And the economic woes could be worsened as Brazil prepares to host the 2016 Olympic and Paralympic games in Rio.
It’s widely speculated by market analysts and financial institutions that Brazil will close 2015 with a 1.8 percent contraction of the GDP.
Before the world economic crisis at the end of 2008, Brazil had 21 consecutive quarters of expansion, before retracting in 2009 but then hit 7.6 percent growth in 2010.
Growth has since slowed from 3.9 percent in 2011 to just 0.1 percent last year, according to World Bank data.
Brazil’s economic woes are compounded by the slowdown in demand for commodities, particularly from China, as well as the general fall in commodity prices.
A graft scandal at the state-run oil giant Petrobras, where construction companies paid bribes in return for favorable contracts, has also paralyzed the economy, as firms implicated – many of which are key drivers of the economy – have had credit lines frozen.
