Brazil in recession

Brazil's gross domestic product contracted by 0.6 percent in the second quarter, after a 0.2 percent drop in the three previous months, the government reported Friday.

It marked the first recession in the world's seventh-largest economy since the global financial crisis of 2008.

Brazilian Finance Minister Guido Mantega appeared unwilling to attach a wider significance to the second consecutive quarterly contraction of the national economy.

"For me recession defines drawn-out stagnation like the one that European countries had," he said. "Recession happens when there's rising unemployment and falling income, and we have the opposite here", the minister argued.

Shrinking investment volumes

The uninspiring growth figures came just five weeks ahead of a general election in the country in which President Dilma Rousseff seeks another term in office.

The government doesn't need any negative economic headlines now, but it had to admit that business confidence in the country is decreasing. Investment, for instance, plummeted by 5.3 percent in the second quarter, compared to the January to March period, and by 11.2 percent year-on-year.

The figures will damage already low industrial and consumer confidence in what once was a rapidly expanding regional economic powerhouse.

Finance Minister Mantega admitted the government would have to lower its growth estimate for the whole of 2014 which it had already revised down to 1.8 percent from 2.5 percent earlier this year.

hg/sri (dpa, AFP, AP)