Brazil's recession worst in country's history
RIO DE JANEIRO: Brazil is suffering the worst recession of its history, official figures showed Tuesday, but Finance Minister Henrique Meirelles insisted that Latin America's biggest economy will soon bounce back.
The government statistics office said the economy shrank 0.9 percent in the last three months of 2016, the eighth consecutive quarterly dip. That meant an overall fall of 3.6 percent in 2016, following a 3.8 percent fall in 2015.
The two straight years of economic decline mark the deepest recession since records began.
Brazil used to be an emerging markets poster child under president Luiz Inacio Lula da Silva between 2003 and 2010, riding booming commodity prices and Chinese demand. It also won praise for far-reaching social policies aimed at lifting tens of millions of people from extreme poverty.
But the country was unprepared for a slump in prices for its oil, soy, metals and other commodity exports, as well as political instability and a huge corruption scandal. By 2014 the economy was flat-lining and in 2015 entered negative territory.
Unemployment recently reached a record 12.6 percent, amounting to around 13 million people out of work.
Speaking in Brasilia, Meirelles acknowledged Brazil "faces its worst crisis in history."
However, he said the problems reflected in plummeting GDP figures were linked to past mistakes, which today's government is fixing.
"The GDP announced today refers to the past. It's looking in the rearview mirror," he said. "It's the result of a series of policies."
"Brazil is already a country returning to normal," Meirelles said. "The country is clearly already growing."
President Michel Temer is working to get austerity and structural reforms through Congress with a view to restoring fiscal responsibility to the debt-laden government.
Reacting to the latest GDP figures, Temer also promised improvements and cited a steady slackening in the long stubborn inflation rate.
"We want to put the country on the rails so that whoever comes after can simply drive the train," he said. "The priority is to create jobs."
Temer took over last year after his predecessor Dilma Rousseff was impeached for illegally manipulating government accounts with unauthorized loans.
However, Temer's hand has been weakened by enormous unpopularity and a spreading corruption scandal. Several of his chief allies are mired in a probe looking at a sprawling bribery and embezzlement network.
The probe is due to pick up pace soon with the expected release of damaging testimony against senior political figures and opening of new criminal cases.
Temer also faces scrutiny in the Supreme Electoral Court which must decide whether his 2014 election as then vice president to Rousseff should be annulled due to alleged use of bribe money during the campaign.
According to the statistics office, the fourth quarter of 2016 -- October through December -- saw the economy slump 0.9 percent compared to the previous quarter. The picture was even gloomier compared to the final quarter of 2015: a decline of 2.5 percent year on year.
The latest quarterly declines were led by the agricultural sector, which saw a 6.6 percent fall, 3.8 percent in the industrial sector, and 2.7 percent in services, the statistics office said.
This rapid retreat by the economy took place despite a hoped for boost from the Olympics, which Rio de Janeiro hosted in August.
However, market analysts and the government expect better news soon, predicting the economy will finally exit the recession this year, albeit ending 2017 with the most tepid of growth rates -- 0.49 percent.
Meirelles forecast that last quarter growth in 2017 would see 2.4 percent compared to the same period last year.
The government statistics office said the economy shrank 0.9 percent in the last three months of 2016, the eighth consecutive quarterly dip. That meant an overall fall of 3.6 percent in 2016, following a 3.8 percent fall in 2015.
The two straight years of economic decline mark the deepest recession since records began.
Brazil used to be an emerging markets poster child under president Luiz Inacio Lula da Silva between 2003 and 2010, riding booming commodity prices and Chinese demand. It also won praise for far-reaching social policies aimed at lifting tens of millions of people from extreme poverty.
But the country was unprepared for a slump in prices for its oil, soy, metals and other commodity exports, as well as political instability and a huge corruption scandal. By 2014 the economy was flat-lining and in 2015 entered negative territory.
Unemployment recently reached a record 12.6 percent, amounting to around 13 million people out of work.
Speaking in Brasilia, Meirelles acknowledged Brazil "faces its worst crisis in history."
However, he said the problems reflected in plummeting GDP figures were linked to past mistakes, which today's government is fixing.
"The GDP announced today refers to the past. It's looking in the rearview mirror," he said. "It's the result of a series of policies."
"Brazil is already a country returning to normal," Meirelles said. "The country is clearly already growing."
President Michel Temer is working to get austerity and structural reforms through Congress with a view to restoring fiscal responsibility to the debt-laden government.
Reacting to the latest GDP figures, Temer also promised improvements and cited a steady slackening in the long stubborn inflation rate.
"We want to put the country on the rails so that whoever comes after can simply drive the train," he said. "The priority is to create jobs."
Temer took over last year after his predecessor Dilma Rousseff was impeached for illegally manipulating government accounts with unauthorized loans.
However, Temer's hand has been weakened by enormous unpopularity and a spreading corruption scandal. Several of his chief allies are mired in a probe looking at a sprawling bribery and embezzlement network.
The probe is due to pick up pace soon with the expected release of damaging testimony against senior political figures and opening of new criminal cases.
Temer also faces scrutiny in the Supreme Electoral Court which must decide whether his 2014 election as then vice president to Rousseff should be annulled due to alleged use of bribe money during the campaign.
According to the statistics office, the fourth quarter of 2016 -- October through December -- saw the economy slump 0.9 percent compared to the previous quarter. The picture was even gloomier compared to the final quarter of 2015: a decline of 2.5 percent year on year.
The latest quarterly declines were led by the agricultural sector, which saw a 6.6 percent fall, 3.8 percent in the industrial sector, and 2.7 percent in services, the statistics office said.
This rapid retreat by the economy took place despite a hoped for boost from the Olympics, which Rio de Janeiro hosted in August.
However, market analysts and the government expect better news soon, predicting the economy will finally exit the recession this year, albeit ending 2017 with the most tepid of growth rates -- 0.49 percent.
Meirelles forecast that last quarter growth in 2017 would see 2.4 percent compared to the same period last year.
