Brazil’s Economy Contracts 0.2 Percent in Q1 of 2015

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazil’s economy registered a decrease of 0.2 percent during the first quarter of 2015 in relation to the fourth quarter of 2014, according to the IBGE (Brazilian Statistics Bureau), totaling R$1.408 trillion for the first three months of the year. In comparison to the same period last year, the decline is even greater with 1.6 percent.

The data, released Friday morning (May 29th), shows that in relation to the last quarter of 2014 the only sector of the economy which registered a positive result was the agribusiness segment, growing by 4.7 percent, while services registered a negative growth of 0.7 percent and industry retreated by 0.4 percent. The services sector represents approximately sixty percent of the Brazilian GDP.

According to the IBGE, all components of domestic demand retreated these first three months of 2015 in relation to the previous three-month period. Household consumption fell by 1.5 percent while government consumption and investments fell by 1.3 percent. In the foreign sector, exports grew by 5.7 percent while imports grew by 1.2 percent in relation to the fourth quarter of 2014.

Both market analysts and government officials had already expected a negative number for the first quarter. Last week the Central Bank released its Indice de Atividade Economica – IBC-Br (Economic Activity Index), which showed a retraction of 0.81 percent in the economy during the first quarter of this year.

For 2015, financial analysts are forecasting a contraction of 1.24 percent of the GDP. If this forecast is confirmed it would be the worst result in the past 25 years for the country’s GDP. In April, Minister Joaquim Levy admitted that the country’s GDP for 2015 may end in negative territory.