Brazil: GDP contracts for second consecutive quarter, Brazil enters technical recession
August 29, 2014
In the second quarter, GDP contracted 0.6% over the previous quarter in seasonally-adjusted terms, which marked the largest contraction since Q1 2009 and was steeper than market expectations of a 0.4% decrease. The Brazil Institute of Geography and Statistics (IBGE) revised the Q1 figure down to a 0.2% drop (previously reported: +0.2% quarter-on-quarter) and that, coupled with the Q2 decline, indicates that Brazil is now in a technical recession. The Q2 contraction resulted from a deterioration in domestic demand.
Domestic demand shrunk 2.0% in Q2 (Q1: -0.9+% quarter-on-quarter), which marked the worst result since Q1 2009. Fixed investment fell further from a 2.8% decrease in Q1 to a 5.3% contraction in Q2. Government consumption also deteriorated in Q2; it swung from a 0.4% increase in Q1 to a 0.7% decrease. In contrast, private consumption expanded 0.3% over the previous quarter, which was up from a 0.2% fall in Q1.
On the external side of the economy, exports of goods and services expanded 2.8% in Q2, which markedly contrasted the 3.8% contraction tallied in Q1. Conversely, imports fell 2.1% over the previous quarter, which contrasted the 0.9% increase recorded in the previous period.
The economy contracted 0.9% in Q2 compared to the same quarter last year, which contrasted the 1.9% increase tallied in Q1.