New Data Show Brazil Is in a Recession or About to Get into One

Brazilian flag and the real currency Brazil’s economic activity went down sharply in June as the World Cup football tournament shut down shops and factories across the country, adding to signs Latin America’s largest economy slipped into recession.

The Brazilian central bank’s IBC-Br economic activity index fell 1.48% in June from May in seasonally adjusted terms, the bank said on Friday. It was the fifth monthly decline in a row and the worst since May 2013. The slowdown was worse than the median estimate of a 1.3% drop.

As a result, economic activity fell 1.2% in the second quarter from the first period, versus a decline of 0.02% in the prior three months.

However the index, a gauge of activity in the farming, industrial and services sectors, has proven to be an imperfect barometer of gross domestic product data compiled by statistics agency IBGE, which is considered the official measure of economic growth.

Second-quarter GDP data will be released on Aug. 29. While initial data showed GDP rose 0.2% in the first quarter, many economists believe the result could be revised lower.

Central bank figures were revised lower on Friday to a drop of 0.80% in May, versus a prior 0.18% decline. Without seasonal adjustments, the economic index dropped 2.15% in June from the same month a year ago.

Quarter two-on-quarter two, the decline was 1.54%, according to non-seasonally adjusted data, since equal periods are being compared.

Mercopress

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