Brazil"s economy keeps contracting

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Brazil’s economy continued to shrink in the first quarter of 2016 with a 0.3% contraction.

It was the fifth consecutive quarter of contraction, official figures showed.

However, the figure was better than the 0.8% contraction predicted by economists.

As well as its worst recession in decades, Brazil is grappling with political crisis following the impeachment of president Dilma Rousseff.

The Instituto Brasileiro de Geografia e Estatistica (IBGE) also said that Brazil’s GDP fell by 5.4% year-on-year – also better than the 6.1% contraction forecast by Itau Unibanco.

Earlier, the Organisation for Economic Cooperation and Development cut its economic growth forecast for Brazil, citing political and corruption concerns.

The Brazilian economy is now expected to contract by 4.3% this year, the OECD said.

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Brazil’s economy keeps on contracting sharply – one of the fastest reversals of fortune in the emerging world.

The question now is: has the economy reached the bottom, or will it fall even further?

The deep cuts that Brazil’s interim government plans to implement suggest things will get worse before they start improving.

Analysts believe Brazil’s best chance of exiting recession are still a year away.

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According to the latest official GDP figures, the biggest industrial decrease was mining, with the sector contracting by 1.1%.

The manufacturing sector was negative for the sixth consecutive quarter, contracting by 0.3%.

Construction fell by 1%, but the utilities sector expanded by 1.9%.

In services, trade (-1.0%), financial intermediation and insurance (-0.8%) and information services (-0.7%) showed the largest declines compared with the previous quarter.

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Brazil"s economy keeps contracting
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