São Paulo – The Brazilian economy, which was already facing a difficult situation in the first months of the year, further deteriorated in Q3 of this year, according to the document Letter of Conjuncture by the Institute for Applied Economic Research (Ipea). The institute, a public foundation linked to the Ministry of Planning, Budget and Management, shows that all indicators related to economic activity remained in decline in the period.
Ipea underlines that the political crisis increased uncertainty in the markets over the government’s capacity to approve the economic policy necessary measures. “Since the economy went into recession in Q2 2014, the accumulated decline of the GDP is already closing in on 6.0%, also a record for the last 20 years”, said the publication’s coordinator, Fernando Ribeiro, in a statement by the institute. But the institute points out that the mineral extraction industry is a positive exception, driven by the increase in output of oil, gas and iron ore.
According to Ipea, the addressing of three essential adjustments for the rebalancing of the economy – external sector, inflation and public accounts – generated different results in Q3. “The most important improvements are happening with external accounts, with a significant reduction of the deficit in current transactions”, says the survey.
Meanwhile, inflation remains under pressure and there’s also the deterioration of the market’s expectations for the increase in prices in the future. The fiscal results also haven’t shown tangible improvements, according to Ipea. “Despite of the rigorous spending control seen in the last year and the approval of several proposals on control of mandatory spending and increase of public revenues sent by the government to Congress throughout the year”, says the document.
The Gross Domestic Product (GDP) declined 1.7% in Q3 over the previous three months, in the deseasonalized series, and 4.5% over the same quarter in 2014. Families’ consumption registered the third consecutive decline in the seasonally adjusted series, with a 1.5% decline over the previous three months and a 4.5% decline over the same period of last year. Ipea points out, however, to the growth of the trade surplus.
*Translated by Sérgio Kakitani
