G.D.P. Plunges 1.9% in the Second Quarter and Brazil Falls into Recession

08/31/2015 - 08h57

In evidence since the beginning of the year, the recession in Brazil was confirmed and measured in official numbers. The only thing that cannot be seen yet is the way out of the crisis.

Data disclosed on Friday (28) show a record decline in investment, which heralds the longest economic retraction since the beginning of the Plano Real in 1994.

The yardstick of production and income in the country, the G.D.P. (Gross Domestic Product), fell 1.9% in the second quarter of the year in comparison with the first - which had already declined 0.7%, according to new estimates.

Two consecutive quarters of economic decline are a traditionally accepted indicator of recession.

The motor of the economy during the PT administrations, families' consumption showed a 2.1% decline, the biggest since the 2001 recession, when the country was facing electric power rationing and the world was undergoing the consequences of the 9/11 attacks.

There have been declines in the various sectors and economy transactions, but it is not difficult to pin down their origins: the slump in investments for a continuous period of two years - which had never occurred since statistics began in the 1990s.

In that period, investments dropped to 17.8% from 20.7% of the part of the G.D.P. earmarked for those expenses, aimed at increasing productive capacity.

It is a very clear signal of businessmen's pessimism regarding the future of inflation, interest rates and the political scenario.

It also makes an eventual recovery more remote. Ever since the Real became the currency in the 1990s, the G.D.P had never declined for a period longer than two consecutive quarters; now there is a consensus that the third quarter will also show a decline.

Translated by THOMAS MUELLO

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