South America’s biggest economy, Brazil, continued to contract in the first quarter of 2016, shrinking by 0.3%. It was the fifth successive quarter in which it has shrunk.
The size of the contraction, however, was smaller than the 0.8% consensus forecast by economists. The news came as the country continues to wrestle with deeply polarizing political crisis that has engulfed the Presidency of Dilma Rousseff amid a corruption scandal at the state-controlled oil giant, Petrobras.
The Instituto Brasileiro de Geografia e Estatistica (IBGE) said that Brazil's gross domestic product declined by 5.4% year-on-year. Earlier, the Organisation for Economic Cooperation and Development (OECD) slashed its economic growth outlook for Brazil, blaming political and corruption worries. It now expects the Brazilian economy to shrink by 4.3% this year.
“The future looked so rosy for Brazil,” said Monica Freeman, chief markets strategist at Monex Financial.

“This is an incredibly sharp reversal in fortunes for one of the BRICS countries that held so much promise in the wake of the global financial crisis and, going by the cuts the interim government has planned, things are going to get much worse.”

The only silver lining came from exports which increased by 6.5% compared with the final quarter of 2015 thanks, in part, to a precipitous fall in the value of the Brazilian real.
Monex Financial says it believes that Brazil will remain mired in recession until at least next year and even then, failure by the interim government of Michel Temer to implement budget and spending cuts will prolong the pain for millions of Brazilians.

About Monex Financial
Monex Financial is a privately held, fully independent investment and wealth management leader, with retail operations based in Toronto, Canada and corporate trading division headquartered in Tokyo, Japan.

From our offices in Toronto the capital city of the province of Ontario and financial and business capital of Canada, we serve private individuals and families from N. America to Europe and with our corporate trading division strategically located in Tokyo, Japan, we have unrivalled access to Asia’s high yielding emerging markets, access to corporate resources, private equity and global mergers and acquisitions.