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| Brazil's economy shrinks by 0.2% | Brazil's economy shrinks by 0.2% |
| (34 minutes later) | |
| Brazil's economy shrank in the first quarter of the year as severe droughts held back growth, the country's statistics agency reported. | |
| It contracted by 0.2% compared with the previous three months, the government's statistical agency said. | It contracted by 0.2% compared with the previous three months, the government's statistical agency said. |
| However, this was not as bad as the 0.5% contraction that economists had expected. | However, this was not as bad as the 0.5% contraction that economists had expected. |
| The country, the seventh largest economy in the world, has seen economic growth fall sharply in recent years. | |
| The slowdown is partly a result of low commodity prices, sluggish global growth and low investor confidence. | The slowdown is partly a result of low commodity prices, sluggish global growth and low investor confidence. |
| Higher interest rates and tax increases have also held back consumer spending, an important element of Brazil's economy. | Higher interest rates and tax increases have also held back consumer spending, an important element of Brazil's economy. |
| Scandal | |
| A massive corruption scandal at the state oil giant Petrobras has seen the firm cut back on investment to save money, causing thousands of workers to lose their jobs. | |
| Dozens of senior politicians and business leaders are implicated in the Petrobras scandal. | |
| Thousand of workers and dozens of small companies have felt the impact of the scandal, laying off employees and leaving contracts unfulfilled. | |
| For example, one of Brazil's leading construction companies, Galvao, filed for bankruptcy after Petrobras stopped paying it for services. That meant a major road project Galvao was expected to complete has now been mothballed. | |
| Economists expect Brazil's economy to continue to shrink throughout the year. | |
| Cristian Maggio, head of emerging markets research for TD Securities, said: "The trend is for weaker growth going forward. | |
| "Brazil is getting back into a recession." |