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Brazil’s economy is still hot garbage

AP Photo/Felipe Dana
Still underwater.
Published This article is more than 2 years old.

Brazil’s economy is still shrinking.

New data released today (June 1) shows gross domestic product in South America’s largest economy declined by 0.3% in the first quarter, compared with the previous quarter. Over the last year, Brazil’s GDP has declined by 5.4%, driven by a collapse in the price of commodities such as crude oil and iron ore. Meanwhile, virulent political turmoil—President Dilma Rousseff was recently suspended pending an impeachment trial—isn’t exactly doing wonders for the business climate.

The most dire news to come out of today’s GDP report—GDP is the broadest measure of goods and services produced by an economy—was an ongoing sharp downturn in investment. Gross fixed capital formation, a key gauge of investment in things like factories and commercial construction, which enhance the long-term productivity of an economy, declined by 17.5% in the first three months of the year, compared with the first quarter of 2015.

This was the tenth straight decline for this gauge of investment. Such an established pattern of disinvestment is sure to leave a mark on Brazil’s economy for some time to come.

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