Good morning! Today, Brazil on the verge of (technical) recession. Elon Musk has his eyes on the Amazon. Government forced to take care of historic slavery site in Rio.
Technical recession on the horizon
The Central Bank’s economic activity index (IBC-Br) registered drops of 0.27 percent during the month of September and 0.14 percent during Q3. The index is considered to be a reliable predictor of official GDP data.
Why it matters. Per the Brazilian Institute of Geography and Statistics (IBGE), the economy shrank 0.1 percent during Q2. A second negative quarter would put the country into a technical recession.
Frustration. Economists believed the considerable improvement of vaccine rollouts would boost Q3 activity. But rampant inflation and deep economic uncertainty have led to weaker-than-expected performance — observed in recent disclosures of retail, industrial, and services activity data.
What could lead to recession. With higher inflation, the Central Bank is raising benchmark interest rates at a fast pace, which affects credit availability and hits sectors which were previously performing well, such as construction.
- Inflation also keeps families from consuming as their purchasing power dwindles every week. As we explained last week, inflation hit poor families first, but is now taking...