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Recent data from the Instituto Brasileiro de Geografia e Estatística (IBGE) – the country’s official statistics agency – shows that Brazil’s GDP growth contracted by 3.6 per cent in 2016.
This puts immense pressure on President Michel Temer who is already fighting on multiple fronts. He faces a number of corruption charges, has a popularity rate around 10 per cent according to pollsters, and has been struggling to push through radical, if not controversial, reform measures in congress.
Of all the BRICS members, the IMF’s January World Economic Outlook for Brazil was the grimmest. In a blow to Temer’s hope that the country would reopen for business, the IMF report said that it had downgraded 2017 projections down from 0.5 per cent growth to a meager 0.2 per cent.
However, there are signs that certain sectors are making progress.
Brazil’s Central Bank, for example, is also hoping that Brazil’s runaway inflation rate continues to fall. Last year, it hit 10.7 per cent – the highest rate in 10 years – but has lately started to decline coming close to the desired 4.5 – 6.5 per cent rate range.
Official government data released in late January showed that consumer prices in 2016 rose by just 6.29 per cent, well within the Central Bank’s range.
Forecasts currently hold that the inflation rate will fall close to the 4 per cent rage by the end of 2017, likely signalling further interest rate cuts from the Central Bank.
This falls in tandem with expectations by some economic experts that Brazil could emerge from this recession by the end of Q4 this year.
Meanwhile, it may not be the best indicator of a slowly improving economy, but Brazil’s jobless rate has been declining since 2015.
The jobless rate hit 40,864 in January 2017, according to national statistics, considerably less than the nearly 100,000 just a year earlier.
Overall, the number of jobs lost in 2016 was 1.28 million, a slight improvement
In the 12 months through January, 1.28 million jobs ceased to exist in the country. In 2016, the number was 1.32 million – a minor improvement from 1.54 million in 2015.
The BRICS Post with inputs from Agencies