Brazil is facing an economic downturn

Brazil is facing an economic downturn

Brazil faces the distrust of foreign markets after the dissemination of the index of economic activity by the Central Bank (IBC-Br).

The fall of 1,35% registered by the indicator in December was slightly above the expectations of local financial institutions. But the quarterly data, showing a fall of 0.17%, ignited the yellow light to some analysts. Along with the reduction of 0.21% in the previous period, it would mean that the country has fallen into the so-called technical recession, when the economy shrinks for two consecutive quarters.

The data was received cautiously by Brazilian economists, since Central Bank indicator methodology differs from that used by the Brazilian Institute of geography and statistics (IBGE), the body that makes the official calculation of the gross domestic product (GDP) of Brazil. The final data of GDP in 2013 – and the calculation of the last quarter – will be disclosed by IBGE on Feb. 27. The fact is that GDP fell 0.5% between July and September. And if the quarterly results of the last three months of the year is also negative, rumors of recession would be confirmed.