"Red, red, red for Brazil"
Brazil was the world's sixth largest economy in 2011. And was looking forward to its largest city, Rio de Janerio, hosting the 2016 Olympic Games.
Well, it's now becoming very ugly in Latin America's largest economy, as France, India and Italy have pushed Brazil down to ninth in global GDP rankings.
GDP fell 1.7% in the September quarter. That's September quarter, not the 12 months to September. And that is after falling 2.1% the previous quarter. That makes it six successive contractions. Unemployment is 8.9% and rising. Inflation is over 10% p.a. And the central bank's base rate is now 14.25%. Industrial production in September fell 10.9% y-o-y, the 19th month in a row of contraction.
But wait, there's more. An epic corruption and kickback scandal surrounding state-run oil company Petrobras is spreading up the government pyramid to the highest levels : a week ago, the government’s Senate leader was arrested for allegedly trying to meddle in the investigations. On Monday, the government imposed a partial shutdown and froze discretionary spending. On Tuesday, impeachment proceedings were commenced against President Dilma Rouseff. Standard & Poors has slashed Brazil's credit rating to junk, citing government finances, the political mess, and the deepening economic nightmare.
The usually circumspect Goldman Sachs say, "pretty soon we have to start labelling this a depression".
Not even the Olympic Games can save this basket case.