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| Brazil's economy shrinks by 0.2% | Brazil's economy shrinks by 0.2% |
| (about 1 hour later) | |
| Brazil's economy shrank in the first quarter of the year as severe droughts held back growth, the country's statistics agency reported. | 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 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. |
| The better-than-expected figure was partly due to a rise in the agricultural sector which saw an increase in coffee prices. | The better-than-expected figure was partly due to a rise in the agricultural sector which saw an increase in coffee prices. |
| But that was offset by a fall in household consumption of 1.5%, the biggest drop since the credit crunch of 2008. | But that was offset by a fall in household consumption of 1.5%, the biggest drop since the credit crunch of 2008. |
| Brazilians are struggling to pay back debt built up during the boom years, a struggle intensified by higher interest rates. | Brazilians are struggling to pay back debt built up during the boom years, a struggle intensified by higher interest rates. |
| Analysis: Daniel Gallas, South America business correspondent | |
| If Brazilian authorities are right in their forecast, 2015 will see the country's worst economic contraction since 1990, when the country was still experiencing hyperinflation. | |
| Planning minister Nelson Barbosa predicts a 1.2% drop in the GDP for 2015. | |
| Part of Brazil's current problems are self-inflicted. | |
| After three years of overspending, in an attempt to get the economy growing rapidly, President Dilma Rousseff has now moved towards austerity. | |
| Many sectors that received benefits - such as labour tax breaks - are now facing steeper costs. A weaker Brazilian currency has also contributed to higher inflation, which is predicted to rise above 8% - well beyond the government's 4.5% target. | |
| A new finance minister has a mission to get Brazil's economy growing in 2016 or 2017. | |
| But everyone accepts that 2015 will be a year of relatively high inflation and negative growth. | |
| The government has also reined back spending, and the figures showed a fall of 1.3% in government consumption. | The government has also reined back spending, and the figures showed a fall of 1.3% in government consumption. |
| Scandal | 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. | 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. | Dozens of senior politicians and business leaders are implicated in the Petrobras scandal. |
| Thousand of workers have felt its impact, with dozens of small firms laying off employees and leaving contracts unfulfilled. | Thousand of workers have felt its impact, with dozens of small firms 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. | 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. | 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. | 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." | "Brazil is getting back into a recession." |