Brazil In Depression: Goldman-Sachs
Brazil has entered “an outright depression,” economists at global investment banking group Goldman-Sachs announced on December 1.
The conclusion comes after Brazil’s national statistics institute, IBGE, said the country’s gross domestic product (GDP) contracted 1.7 percent in the three months ended in September, after a revised 2.1 percent drop the previous quarter.
This marks the sixth contraction in a row, and the worst since the beginning of modern records in 1996. Year-over-year, the Brazilian economy shrank 4.5-percent.
“What started as a recession driven by the adjustment needs of an economy that accumulated large macro imbalances is now mutating into an outright economic depression given the deep contraction of domestic demand,” Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc., wrote in a report Tuesday.
While Brazil remains Latin America’s largest economy, it has fallen from 6th largest economy in the world down to 8th.
While an epic corruption and kickback scandal surrounding Brazil’s state-run oil company Petrobras, ballooning government deficit, dysfunctional monetary policy, and government gridlock are all contributing to the economy’s collapse, Zero Hedge notes the country “just imploded” in December 2014 after the above problems coincided with the fact that China, which had been devouring its commodities, suddenly decided to stop purchasing them.