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"No Recovery For You!" Brazil Officially Enters Recession, Goldman Calls Numbers "Disquieting"
Well, you know what they say: when it rains it pours, especially when you’re the poster child for an epic emerging market unwind and you’re suffering through the worst stagflation in over a decade while trying to clean up the feces ahead of the summer Olympics.. or something.
Make no mistake, Brazil is in a tough spot.
Here’s a list of problems: 1) collapsing commodity prices, 2) the worst inflation-growth outcome in over a decade, 3) deficits on both the fiscal and current accounts, 4) street protests calling for the President to be sacked, 5) a plunging currency, 6) allegations of rampant government corruption. And we could go on.

On Friday, the latest quarterly GDP print shows the country sliding into recession (of course these determinations are always backward looking and just about every indicator one cares to observe seems to show that the economy is closer to depression than it is to the early stages of recession) as output contracted 1.9% in Q2. Here's the summary from Barclays:
Q2 15 real GDP in Brazil surprised on the downside, contracting -1.9% q/q sa and compatible with a y/y print of -2.6%. This follows a downwardly revised -0.7% q/q sa Q1 real GDP print (previous: -0.2%), and also a flat real GDP print in Q4 14 (previous: 0.3% q/q sa). As a matter of fact, the past three quarters were revised to the downside, which now implies a strong negative carry-over for this year: if real GDP is flat in H2 15, the annual growth would be -2.3%.
Relative to our forecast, household consumption, fixed-assets investments and imports all surprised on the downside. These components reflect the adverse conditions for domestic demand, as a reflection of higher inflation, interest rates, fall in income and weaker currency.
And from Goldman:
The forecasted deeper 2015 recession will contaminate the 2016 growth outlook. Given the worse-than-expected 2Q figure and the downward revision to 1Q sequential growth, our profile for 2H2015 growth points now to a 2.6% contraction of real GDP in 2015 (down from our previous -2.1% forecast) and worsens the statistical carry-over for growth in 2016 to -0.8%. That is, were the economy to stay flat throughout 2016 at the expected 4Q2015 level, real GDP would contract by 0.8% in 2016. Hence, we are now forecasting real GDP to contract 0.4% in 2016 (down from the previous -0.25% forecast). This is consistent with average quarterly real GDP growth of 0.10%-0.20%, a path that is still subject to obvious downside risks given the prevailing high level of macro and political uncertainty and recognized negative skew in the distribution of domestic and external risks.
The latest on the political front is that President Dilma Rousseff has 15 days to explain to the the Federal Accounts Court why everyone seems to think that she intentionally delayed nearly $12 billion in social payments last year in an effort to make the books look better than they actually were. And while we won’t endeavor to weigh in one way or another on that issue, what we would say is that if someone in Brazil is doctoring this year’s books, they aren’t doing a very good job because things just seem to keep going from bad to worse.
Case in point, on Friday, Brazil said its primary budget deficit was R10 billion in July, far wider than expected. The takeaway: "no primary surplus for you!"
Here’s Goldman with the breakdown:
The consolidated public sector posted a worse than expected R$10.0bn deficit in July, driven by the weak performance of both the central and regional governments. The central government posted a R$6.0bn deficit in July and the states and municipalities a larger than expected R$3.2bn deficit. Finally, the state-owned enterprises added another R$810mn to the overall deficit.
On a 12-month trailing basis the consolidated public sector recorded a 0.9% of GDP primary deficit in July, worse than the 0.6% of GDP deficit recorded in December and, therefore, increasingly distant from the new unimpressive +0.15% of GDP surplus target. Hence, it is increasingly likely that we may observe a second consecutive year of primary fiscal deficits.
The overall public sector fiscal deficit (primary surplus minus interest payments) widened to a very large 8.81% of GDP, from 6.2% of GDP in the 12 months through December 2014. The net interest bill is running at 7.92% of GDP in the 12 months through July.
Gross general government debt worsened to 64.6% of GDP, up from 58.9% of GDP at end 2014 and 53.3% of GDP in 2013.
The twin combined fiscal and current account deficits now exceed a disquieting 13.2% of GDP.
Overall, we have yet to detect a visible turnaround in the fiscal picture. The overall fiscal deficit is tracking at a disquieting 8.8% of GDP, driven in part by the surging net interest bill, which was exacerbated by the large losses on the central bank stock of Dollar-swaps. We expect the gradual fiscal consolidation process to last at least 3-4 years, perhaps longer.
As Barclays recently argued, a downgrade to junk is now just "a matter of time," a development which may well usher in a new era in which the world's emerging economies begin to backslide into "frontier" status, and as we put it earlier this month, after that it'll be time to break out the humanitarian aid packages.
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Bonus: Charting a Brazilian nightmare
Bonus Bonus: "That aint no unpopular President, THIS is an unpopular President"...
Stay positive Brazil...

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"Disquieting", as in how the fuck were we supposed to know and not caught blindsided even though we already did know and had to say otherwise to dump our stuff on the Muppets so it's "disquieting". Not the way you think... but what we did to the clients. Now That's Disquieting.
Now, shut up and back to work
<< surprised on the downside>>
Surprised whom?
It's about time that the click-bait made it full-size into the story...
If money gets too tight she'll have to start spending less by buying clothing made of less material.
They call it "Dilmazation".
wow.
brazil flag girl.
now the weekend has begun.
thank you tylerz.
http://www.bing.com/images/search?q=brazil+flag+girl
see you at ashley madison's
Like I said before, Brazil is a large, resource rich country that has been at peace for two centuries. It has drawn people from all over the world. Yet it is a shit hole.
The elite running Brazil should be replaced en masse. They are criminally incompetent.
Knucks, i'm seeing a lot of insider buying at SUNE, TERP, GLBL. Affiliated are UPC Renewables and hundreds of shell and shelf LLCs. Thay got deutchbank, goldman and the morgue working with them.
Did you get a new intern who is good with chart porn, Tyler?
It seems that no body is willing to say contagion...
The central banks are all about to get a bad case of the flu and none of them have any Theraflu on hand.
DaddyO
$17.95 In Stock.
http://www.amazon.com/Theraflu-Multi-symptom-Severe-Packets-Nighttime/dp...
Stay positive Brazil...
I am positively in love (er, lust) with the babe in the last pic. Go Brazil.
Not the gal with the green lips next to the guy with the horns growing out of his head?
I toldja to stay away for them Brazilian "chicks"
A guy could lose a kidney that way.
Freind of mine married a gal from Brazil They like to pork.
Anglo --- she is 20 to 50 lbs heavier now, than when the pic was taken, and that is if it was taken in aug, 2015. They gain another 70 more immediately after the wedding
Muito arroz e pão de queijo tends to do that. But it is all so mutio bom!
My wife still fits into her wedding dress. There's a reason you check out her mother before marrying her.
LBFM ---- an older navy term
Let's just look forward to the Olympics - don't be a party pooper!
Gold medals for crime, rape, drugs, murder, disease, sickness, infestations, filth, hunger and general fucked up ness.
Was in Sao Paulo and Rio 20+ years ago and it was bad then. And I mean BAD.
I can only imagine the shit holes they've deteriorated into since.
Participation certificates for everything else so nobody's offended.
No thanks, I'll stay home, you can keep the free vacation. Honest. No, I don't wanna get on the plane. Please stop pushing. Stop it!
Sorry, forgot the sarc. Yes of course you're right, but you need to provide circuses too:
http://www.imdb.com/title/tt0080482/?ref_=fn_al_tt_1
Olympics my ass. Insiders are facing the biggest mess ever. Touch and go as to whether they happen.
The CFA cirriculum a few years back was chock full o' BRICS talk LMAO
Always come to ZH Brazil articles for the pics. Never fails.
The reason that "lady" is smiling...she just learned that her job at Ashley Madison has not been eliminated..yes you made the cut..
Let's not forget the drought in Brazil. Ironically, even though it's in a country with 12% of the world's fresh water, South America's largest city (Sao Paulo) is on the verge of a major non-currency crisis.
http://news.nationalgeographic.com/2015/06/150628-sao-paulo-brazil-droug...
In addition to the many economic problems in Brazil their futbol team sucks.
Costa Rica will beat them 3-1 a week from tomorrow in New Jersey.
Brazil was having a party when China was booming. The China slowdown is killing them and their resource exports. I think this picture is going to be replayed in many countries including Debtbro Obama's america.
Well, at least it's not disconcerting, or, God forbid, perturbing
Brilliant.
Brazil is the country of tomorrow and always will be.
What about GDP PPP terms? Russia dropped almost half of GDP but that entirely accounts for the fact the Rouble dropped by half, yet the PPP terms are almost unchanged (well, dropped as well, but not nearly as much) due to the fact that inflation wasn't increased by half. So unless Brazilians cannot purchase the same goods anymore or alternatives, then I can see a problem. But the rest ends up as BS since GDP nominal is counted in USD.
Here are some more signs of a recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
http://www.zerohedge.com/news/2015-07-27/when-will-we-ever-learn/
Here is how to respond.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
All so true - Sao Paulo and Rio bad etc. I would not pick Detroit or whatever other hellhole either. Most countries, big cities will be beaten to coma when TSHTF. However, some REGIONS may be doing good even under severte distress around, Brazil has some places which will qualify as "life hedge properties". Check out Santa Catarina, Brazil - http://visa4brazil.com/
Investors (insiders like Soros), on top of high interest rates, got a fat "plus" from currency revaluation in the order of additional 10% for years. That was the true source of Brazil and every other "poster child" success... Distracted surfers missed that "wave"...
Now with debt over 350Bn. multiplied X2 (from 50% devaluation so far) Bankers arithmetics are in full effect.
Still, Brazil is by far the most beautiful place on earth, and you should never underestimate this people's capacity to live with far less than we do... been there 9 times in the last 20 years, it still amazes me that flat tv's, cable, internet access and fancy phones are a rarity and most people dresses like they are going to the beach.
Go long suncream?