Brazil’s growth slashed as opposition plans protests

A woman walks past a store’s showcase in the city of Sao Paulo, Brazil, on Aug. 12, 2015. According to information issued by the Brazilian Institute of Geography and Statistics, Brazil’s retail sales in June fell for the fifth consecutive month [Xinhua]

A Central Bank survey, which indicates that Brazil’s economic outlook is becoming progressively more bleak, is likely to fuel increasing calls for President Dilma Rousseff to step down

The Bank’s survey of financial and economic experts shows that the devaluation of the real amid falling consumer spending has pushed GDP growth to -1.97 per cent.

In the past month, the real has fallen 12 per cent against the dollar. At 3.52 to the dollar it is now more than 60 per cent of its value at the same time last year.

The rampant inflation of goods and public services has also undercut consumer confidence, which in turn pushed retail sales down in June for the fifth consecutive month, the Brazilian Institute of Geography and Statistics said this week.

Despite the Central Bank’s recent increase of interest rates to 14.25 per cent, inflation has surpassed analyst expectations and reached 8.9 per cent in June.

In July 2014, inflation stood at 6.5.

The Central Bank says a 4.5 per cent inflation rate is ideal and signals a healthy economy, but analysts expect the inflation rate to be over 9.3 per cent this month.

Citing the flood of negative economic data and the government’s inability to reach growth of about two per cent – which is needed to stabilize “debt ratios” – the Moody’s global rating agency downgraded its assessment of Brazil’s investment health to just a mark above junk status.

Moody’s Investors Service dropped the rating to Baa3 from Baa2 on Tuesday, and said the economic outlook fell from stable to negative.

“Weaker-than-expected economic performance, the related upward trend in government expenditures and lack of political consensus on fiscal reforms will prevent the authorities from achieving primary surpluses high enough to arrest and reverse the rising debt trend this year and next, and challenge their ability to do so thereafter,” Moody’s said.

Dilma’s political battles

These dim assessments have played to the opposition’s plans to hold nationwide protests on Sunday. Calls for Rousseff to resign her presidency are likely to grow louder.

Rousseff maintains she will not step down and urged Brazilians to respect democratic institutions and processes.

“Why did I never consider resigning? Because, it is not possible that someone intends to take down a president, elected by popular vote, just for disagreeing with some policies and processes,” she told local TV station SBT early Thursday.

Meanwhile, Rousseff is also seeing her popularity dramatically fall also due to the Odebrecht/Petrobras corruption scandal.

Odebrecht is one of the companies being investigated in corruption claims against Brazil’s state-owned oil company Petrobras. Over 50 political figures, including 33 members of Congress, are being investigated in the Petrobras case.

The BRICS Post with inputs from Agencies