Brazil tumbles into recession

RIO DE JANEIRO-Agence France-Presse

Men react as they read a board showing the Real-U.S. dollar and several foreign currencies exchange rates in Rio de Janeiro, Brazil, August 26, 2015. Reuters Photo

Brazil has slipped into recession, the government said on Aug. 28, deepening the gloom in the world’s seventh largest economy already battered by falling commodity prices, political crisis and a corruption scandal.

In the second quarter of this year, gross domestic product fell 1.9 percent, according to official figures.

GDP had already been down 0.7 percent in the first quarter, the government statistics agency IBGE said, revising that figure down further from the earlier estimate of minus 0.2 percent.

Year-on-year, the second quarter growth was down 2.6 percent.

Brazil is now in its biggest contraction for six years and with the 2015 slump forecast to extend in milder form through 2016, economists believe the country is headed for the longest recession since 1931.

Brazil’s economy has been tailing off for four years, ever since the end of a boom fueled by commodity exports, principally to China. Falling prices for oil and other commodities have punched huge holes in the budget.