Brazilian G.D.P. Grows but Recession Could Endure

06/02/2017 - 11h47

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NICOLA PAMPLONA

FROM RIO DE JANEIRO

MARIANA CARNEIRO

SPECIAL ENVOY TO RIO DE JANEIRO

Brazil's G.D.P. increased by 1% in the first quarter of 2017 in comparison with the three last months of 2016. It is the first positive figure since the last quarter of 2014.

The result was commemorated by the government; however, economists say that the performance is not a guarantee that the country has overcome its ongoing recession.

The new data on the second quarter disclosed now and the most recent political turbulence (a consequence of the plea bargain of JBS) have increased the risk that the G.D.P. will show yet another decline in coming months.

The political crisis is one of the factors that holds the Brazilian economy back.

The economic improvement was concentrated in products directed to exports, such as soybeans, corn, petroleum and iron ore.

Even the performance of manufacturing industry, which fell 0.9% in comparison with the previous quarter, was only saved by the increase in automobile exports.

The record-breaking unemployment (14 million Brazilians were out of work in April) is another obstacle to the increase of domestic demand.

Jorge Araujo/Folhapress Brazil Finance Minister, Henrique Meirelles

The main factor that contributed to the positive result was the performance of the agricultural sector, which rose 13.4% in the first quarter, driven by record-breaking grain harvests.

The service sector, which corresponds to more than 70% of the country's G.D.P., did not change. And the industrial sector had a 0.9% increase.

The central projection was a 1% hike. Finance Minister Henrique Meirelles says that the tendency is that the economy will be stagnant in the second quarter.

Translated by THOMAS MUELLO

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