World Economy

Brazil Unlikely to Improve Soon

Brazil Unlikely to Improve Soon
Brazil Unlikely to Improve Soon

The Brazilian economy contracted in February for the 14th consecutive month, the central bank reported.

Economic activity declined 0.29% compared with January and by 6.52% from the level of February 2015, as measured by the central bank’s IBC-Br index, which is usually an accurate predictor of gross domestic product, Yahoo reported.

The last time the monthly IBC-Br figure showed a positive variation was December 2014.

Brazil’s GDP shrank by 4.75% over the 12 months that ended Feb. 29, the central bank said.

Latin America’s largest economy retreated 3.8% in the 2015 calendar year–the worst performance since 1990–and private economists surveyed by the central bank expect it to shrink by a further 3.8% this year.

Brazil’s gross domestic product has not declined for two consecutive years since 1930.

Besides continuing recession, Brazil suffers from unemployment and inflation rates above 10% and the situation looks unlikely to improve in the short term amid growing political turmoil as congress weighs the impeachment and removal of President Dilma Rousseff.

Brazil’s economy is shrinking even faster than fellow emerging market Russia, which has been wracked since the second half of 2014 by economic embargoes and plunging oil prices. Its GDP lags far behind the rest of the “BRICS”—the group that is made up of Brazil, Russia, India, China and South Africa.

Brazil’s local currency, the real, rallied on news of the impeachment proceedings, apparently on the belief that a change in government could bring more business-friendly policies and pull the economy from its tailspin. If the congress decides to oust Rousseff when it votes on Sunday, she would be suspended for up to six months while the Senate determines her fate