Brazil’s economy sank deep into recession during the summer while Greece showed better than expected growth. Figures published by the Brazilian government’s statistics agency yesterday showed that GDP shrank by 1.9 per cent in the three months to the end of June, more than the 1.7 per cent forecast by economists.
At the same time the IGBE agency revised down its GDP figure for the first quarter, cutting its estimate of a drop of 0.2 per cent to a fall of 0.7 per cent.
Brazil, which will host next year’s Olympic Games, has been struggling for four years. Unemployment has hit a five-year high, investment and household consumption are both falling and inflation is running at 9 per cent.
The country has also been rocked by a corruption scandal involving bribes and embezzlement at the state oil group Petrobas, and the president, Dilma Rousseff, is facing a political crisis over her austerity measures.
Alex Agostini, chief economist at Austin Rating, said: “The GDP points to what Brazil has been experiencing recently: a strong recession, a pretty turbulent political situation, with inflation rising, with rates rising.”
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Greece’s statistics service also revised its estimate for GDP in the second quarter, but upwards, from 0.8 per cent to 0.9 per cent.
Although the figure showed that Greece, had not fallen back into contraction, economists pointed out that it covered the period before the government introduced capital controls. In June, Athens imposed daily limits on bank withdrawals to prevent its lenders suffering bank runs and risking collapse; these are expected to continue for some time and have a damaging impact on growth.