Brazil's Economy Demonstrates Signs of Recovery Following Three-Year Recession

08/18/2017 - 11h17

Brazil's June economic indicators surprised analysts for the better, contributing to the notion that the recession, which began three years ago, is finally coming to an end.

The 2nd quarter of 2017 appears to have been the turning point, when Brazil's industry, retail and services sectors all began to demonstrate recovery.

However, analysts remain cautious as they monitor the country's political environment, and, more importantly, the possibility of an accelerated rise in the United States' interest rate.

"Given this scenario of political turbulence these past few months, we believe that the country's economic performance [during the second quarter] was reasonable, indicating that the three-year recession may be coming to an end", said Fabio Ramos, who works at UBS.

Despite Brazil's weak IBC-Br results, a Central Bank indicator that predicts GDP (Gross Domestic Product), Ramos believes that the country's performance was not disappointing.

The IBC-Br went up to 0.3% by the end of the second quarter, although up until May, the scenario seemed even grimmer.

Flavio Serrano, an economist at Haitong, said that Brazil's June economic results reduce the possibility of a negative prediction concerning the country's second quarter GDP results.

Mr. Serrano believes that even if the country's economic activity during the second quarter turns out to be negative, it is still safe to assume that the economy has reached a "turning a point". "But that doesn't mean that we will grow remarkably. This is a transition period".

Translated by THOMAS MATHEWSON

Read the article in the original language