Analysis of Past Recessions in Brazil Suggests Current Recovery Is Worst in Country's History

05/21/2018 - 11h39

According to economists who have been assessing economic growth indicators, it is becoming increasingly clear that Brazil's current recovery is the slowest in its history.

Analysis conducted by economist Affonso Celso Pastore, which took into account a decades-long analysis of the country's GDP (Gross Domestic Product) numbers and eight of the country's recessions since the 1980s, reveals that Brazil's economic growth following a recession has never been as slow before.

Four quarters have gone by since Brazil's latest economic recession came to an end, but the country's growth is merely 2.2% percentage points above the valley found in the fourth quarter of 2016. In 1998, which had been the year Brazil's economy had recovered the slowest following a recession, the country managed to grow 4.2%.

The data on the recession and recovery periods all belong to Codace: a committee that was created by the Getulio Vargas Foundation (FGV) that registers the start and end marks of the different economic cycles.

"Seven months ago, we had pointed out how slow economic recovery was; now, all the projections that had put growth at 3%, some even at 4%, have been rendered useless and we're looking at 2% growth," Mr. Pastore said.

The business sector, which is what really gets a country's economic gears turning, has struggled to pick itself back up. As far as industry goes, only a few sectors, such as the automobile sector, have gained traction. A majority of the sectors still has idle capacity. The most optimistic indicators regard the segments that support production.

It is also worth noting that, despite all the adjustments, most companies that have emerged from the recession are in debt, meaning they will be forced to continue to implement cuts and adjustments.

Translated by THOMAS MATHEWSON

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