As China devaluated its currency and the world stocks fell earlier this year, reports say that Brazil economy is in recession and the country's president Dilma Rousseff believes this will pick up in a year.
BBC recently reported that Brazil economy has entered recession after economic date show a contraction by 1.9 percent "between April and June, compared with the previous three months."
While this contraction is expected after the Brazil economy, entering recession, underperformed, analysts reportedly said the figures are "worse than expected."
As to why the world's seventh largest economy entered into recession, the report said this is because of low commodity prices, high interest rates and "sluggish global growth."
Brazil's economy, which just entered recession, is reportedly driven by the Chinese economy through the growth of Brazil exports to the East Asian nation that surged up to $40.62 billion in 2014, according to The Wall Street Journal.
As China stocks fell this year, Brazil economy is among the hardest hit. Recession seemingly is the next step after these events.
"We went from Brazil mania to Brazil nausea," said former Brazilian diplomat Marcos Troyjo in The Wall Street Journal report. "We are looking at a lost decade, where growth stagnates, inflation is high, and, most sadly, a decade where you've learned nothing."
Despite these problems, Brazil president Dilma Rousseff believes this recession will not last long, as her administration is reportedly working to decrease fiscal deficit and bring back confidence.
"The process of falling commodity prices due to the adjustment in China will continue to burden the global economy for a long time," she said in the report on Merco Press and Handelsblatt.
She herself has expected a Brazil economy in recession but hopes "signs of an improvement would then take hold" and "pick up in a year."
With today's happenings, how will this affect Brazil as it hosts the 2016 Summer Olympics? Share your insights in the comments section below.
