“The Brazilian economic downturn took a real turn for the worse in February," according to Markit's Composite PMI, which collapsed to record lows at 39.0. Despite a slightly less bad than expected GDP print this morning (stil down a record 5.89% YoY), hope was quickly extinguished as PMIs showed economic activity continuing to contract at a record pace, job losses accelerating, and manufacturing's collapse accelerating. As Market sums up, "With the global economy also showing signs of slowing, which will impact on external demand, it looks as if the downturn is set to continue to run its course in the coming months."
GDP was a disaster (but better than expected)
“Slightly better than expected, but still a sizable contraction of the economy,” Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc., said by phone. “There’s no indication of a recovery in the near-term.”
But then the more recent PMIs showed the pain is accelerating...
Commenting on the Brazilian Services and Composite PMI data, Rob Dobson, Senior Economist at Markit and author of the report, said:
“The Brazilian economic downturn took a real turn for the worse in February, as the financial and political difficulties in the country drove down output and led to reduced order intakes. The domestic market is especially weak and this hit service providers hard, with activity and new business in this sector falling at survey record rates. The labour market also appears to be in dire straits, as manufacturers and service providers reported further substantial reductions to headcounts.
“The hands of the authorities are largely constrained in terms of providing monetary or fiscal stimulus to push the economy out of recession. Business and investor confidence remain weak and the latest PMI shows that both input costs and output prices surged higher to add to the already high degree of inflationary pressure faced by the economy. With the global economy also showing signs of slowing, which will impact on external demand, it looks as if the downturn is set to continue to run its course in the coming months.”
Still there's always the feces-infested water and Zika virus - Olympics here we come...