The Brazilian economy has taken a step back for the first time since 2016. The economy contracted by 0.2 percent in the first quarter compared to the previous quarter. The national statistics office reported this. That is the first quarterly figure since Jair Bolsonaro took office as president in January.
This brings the largest South American economy closer to a recession, which requires two consecutive quarters of economic decline. Both investment and consumption stagnated in the recent period despite the stimulus of low interest rates. The disruptions in the shipments of iron ore due to a collapsed dam also caused a setback.
This gloomy image is at odds with Bolsonaro’s promises to breathe new life into the economy. The necessary reforms of, for example, the pension system are not forthcoming due to disagreements between the government and parliament.