The slump has made Brazil increasingly toxic on the investor landscape. Last week, Moody’s became the third big credit rating agency to downgrade Brazil to junk status, warning of slow recovery and political uncertainty.
A Markit Brazil Services survey of the private sector released Thursday found a record contraction in economic activity in February, as “companies continued to link the adverse operating environment to the ongoing economic, financial and political crises.”
“The Brazilian economic downturn took a real turn for the worse in February, as the financial and political difficulties in the country drove down output and led to reduced order intakes,” said Rob Dobson, author of the report.
“The domestic market is especially weak” and “the labor market also appears to be in dire straits.”
Brazilian economists warn that 2016 could turn out to be worse than the IMF’s prediction, with the economy shrinking even more than in 2015.
“Brazil has never had such a high level of uncertainty and this is freezing everything up. There is no consumption or investment or credit with this historic level of uncertainty,” Daniel Cunha, an analyst at XP Investimentos in Sao Paulo, said.
The latest gloomy news from Brazil was no surprise, but the severity underlined the depth of problems facing President Dilma Rousseff’s government as it battles both declining economic output and 10.67 percent inflation.
The state statistics office said 2015 registered the worst single annual fall in GDP since 1990, when the economy dipped 4.3 percent.
With the International Monetary Fund predicting a further 3.5 percent shrinkage this year, Brazil appears to be well into a recession of record length and depth.
The men behind 3G Capital, the private equity firm with origins in Brazil, have established themselves as the most audacious deal makers of the last decade.
Now, an economic crisis is unleashing a withering national exploration of how … junk status on Wednesday, igniting a broad sell-off of Brazilian financial assets … But the economic crisis is now curbing Brazil’s ambitions at home and …