Q2 GDP results place Brazil in recession again

Brazil’s Q2 2020 GDP results are out: the Brazilian economy dropped -9.7 percent during the period of social isolation, a negative result that puts the country in a technical recession. 

This is the biggest quarterly drop on record, a series that began in 1996 — and the result was slightly worse than market expectations, which predicted a 9.4-percent drop. Still, the worst performance on record was already priced into Brazilian market performance. 

Brazil’s benchmark stock index Ibovespa rose 2.2 percent after the GDP announcement. According to Victor Beyruti, an economist at Guide Investimentos, the results only confirmed what investors already knew: now the market is really looking at the fiscal deficit. In this sense, the announcement of reforms by President Jair Bolsonaro and Economy Minister Paulo Guedes early in the morning helped to boost expectations for more balanced public accounts.

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