FSMNews

 

On Thursday, Brazil just exited its extreme recession based on record in 2017’s first quarter. Gross domestic grew by 1% due to an increase in performance in the agricultural sector together with market expectations. Such may be a strong advantage for President Michel Temer to stay in power further after a political and corruption scandal leakage.

 

Brazil’s history of recession

In 2015, the economy of Brazil contracted by 3.8%, and there had been a slight improvement back in 2016 where the economy shrinkage turned out to be 3.6%. The recession lasted for 8 consecutive quarters that time.

This year, the gross domestic product of Brazil rose by 1% compared to the last three months of 2016.

Brazil’s unemployment rate

January of this year, the unemployment rate of Brazil hit 12.6% and last 2016, records reveal that it was 9.5%. About 13 million Brazilians are said to be unemployed.

With news coming all over, indicating that a recovery is to be seen soon – experts say that life is not getting better for the ordinary citizens of Brazil. There are even comments circulating that it feels like the recession is not yet over in the streets of Brazil as the people are still seen struggling.

Temer to stay in office

The last 2 years of Brazil is indeed a huge economic crisis for the country. It also caused massive unemployment as the GDP plummeted to higher than 3%.

Currently, Brazilian President Michel Temer is facing a Supreme Court investigation parallel to corruption and obstruction of justice issues. However, such economic relief of the country would mean a boost to the President’s governance and a chance to stay in office and push his reforms. His major agenda are economic reforms for the country. Yet, there are still hovering uncertainties over the President and such are rattling the markets until today.

Economy driven up by an agriculture rebound

Brazilian economists are telling that the increase in GDP is caused by the agricultural sector. Soybeans (major export of Brazil) helped the economy go up. The estimated agricultural output is at 13.4 % for the relevant quarter (the biggest in 20 long years). However, economists are not confident enough to say that Brazil’s economy has really recovered – since, the only basis is agriculture data and its immediate economic impact. They are waiting for other confirmation from services and consumption as big economic contributors.

However, the government is insisting that the economic recovery is due to its efforts.

Brazil economy could not really sustain

Again, experts say that the economy still hasn’t met the necessary conditions telling that it can sustain such growth rate in the succeeding quarters. There are remarks being made that the economy is obviously still trying to gain its momentum – which is definitely a struggle.  

The increase is only attributable to growth of imports and exports, however, investment dropped by 1.6 percent.

What is surprising is that experts call the first quarter increase as false vigor or false strength.

Conclusion

A number of analysts are claiming that the economy of Brazil still has a long way to go before reaching full economic recovery. The country is still not out of rock bottom yet. Moreover, it will have a hard time dealing with its debt dynamics if it continues to grow less until next year.

 

Do you want to get updated about the latest happenings in the stock market, financial world and the economy in general? Subscribe now at FSM News to increase your knowledge and improve your familiarity!