Low Consumption Prolongs Recession in Brazil

06/06/2017 - 12h35

Domestic consumption - one of the main engines of the Brazilian economy - has continued to demonstrate signs of weakness, making economic recovery even more difficult.

Household consumption is responsible for almost 65% of the country's GDP and has shrunk more and more since the recession began. Indicators obtained through different studies suggest that the mood of consumers has worsened in light of the latest political crisis.

According to the IBGE (Brazilian Institute of Geography and Statistics), the Brazilian economy registered positive economic growth during the first quarter, particularly due to the performance of the meat industry and exports, but household consumption continued to decline.

When it comes to household consumption, data indicates a 0.1% dip when compared to the final quarter of last year, and a 1.9% dip when compared to the first quarter of last year.

Statistics concerning industrial production suggest a decline in April. Despite the fact that production of durable consumer goods went up by 0.6% when compared to April of 2016, performance regarding products such as clothing, footwear and food fell by almost 10%.

Economist believe that since unemployment is on the rise and households are in debt, low inflation and all-around access to unemployment benefits have not managed to consistently change the mood of consumers.

CONFIDENCE

On top of an unpredictable economic environment, analysts also believe that the chances of recovering consumer confidence may have been buried by the political crisis, at least for the months of June and July.

Translated by THOMAS MATHEWSON

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