Brazil on the brink of recession

August 31, 2014

Despite die-hard efforts by President Dilma Rousseff, the Brazilian economy has slipped into recession. The President has made various attempts to revive the economy as tax cuts, credit worth billions and also higher social spending. The economy is facing critical inflation numbers and ever since the global recession of 2008, it was the first year of 2 consecutive quarters of slowdown. The current situation has resulted from contracted investments by 5.3% due to dipped confidence of investors. This gave a big blow to the GDP, though family consumption was sustained by wage increases.
The investors who were looking at the economy have been pushed back by the excessive pricing controls, currency interventions and change in regulatory framework in major industries like energy etc. has worked negatively on the prevalent investor sentiment. There has been excessive government interference in the economy which has made the matters worse.
Brazilian Finance Minister Guido Mantega has reportedly expressed concerns regarding the possibility of reaching the GDP targets of 1.9%.Dilma Rousseff faces tough conditions at home as the elections draw near and the current state of economy will erode her supporter base. Other political candidates are banking on this chance to widely criticise her economic policies which have led to the present situation.

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