2014 Brazilian economic crisis

Crisis that began during the presidency of Dilma Rousseff thumb|January 2016 cover of The Economist magazine about the crisis. The cover depicts then-president Dilma Rousseff. From mid-2014 until late 2016, Brazil experienced a severe economic crisis.http://www.aljazeera.com/news/2018/02/michel-temer-signs-security-decree-stem-rio-violence-180216183747559.html Michel Temer signs security decree to stem Rio violence www.aljazeera.com 2018-02-16Barua Akrur Brazil: Yearning for the good times http://dupress.com/articles/global-economic-outlook-q2-2016-brazil/ Global Economic Outlook, Q2 2016 Deloitte University Press 21 May 2016 29 April 2016 https://web.archive.org/web/20160823114946/http://dupress.com/articles/global-economic-outlook-q2-2016-brazil/ 23 August 2016 dead The country's Gross Domestic Product (GDP) fell by 3.5% in 2015 and 3.3% in 2016, after which a small economic recovery began. That recovery continued until 2020, when the COVID-19 pandemic began to impact the economy again. The economic crisis occurred alongside a political crisis that resulted in the impeachment of president Dilma Rousseff. These events combined caused mass popular dissatisfaction with the political system. The cause of the crisis was the aforementioned political crisis, as well as the 2014 commodity price shock, which negatively affected Brazil's exports and reduced the entrance of foreign capital into the economy. However, the most important cause was internal, which is associated with economic measures that didn't achieve the expected results. Adopted in 2011, these measures are known as the nova matriz econômica pt Nova matriz econômica ("new economic matrix", in a free translation). During the economic crisis, high unemployment rates were reported throughout the country, and there was widespread uncertainty regarding Brazil's economic future following a series of political scandals.http://g1.globo.com/economia/noticia/pib-positivo-e-saida-tecnica-da-recessao-mas-recuperacao-e-incerta-entenda.ghtml PIB positivo é 'saída técnica' da recessão, mas recuperação é incerta; entenda 2017-06-01 Darlan Alvarenga 5 June 2017 G1 In the first quarter of 2017, Brazil's GDP rose by 1%. This was the first GDP increase to occur in eight consecutive quarters. Finance Minister Henrique Meirelles announced that Brazil had "emerged from the greatest crisis of the century".http://news.xinhuanet.com/english/2017-03/08/c_136110450.htm Brazil GDP falls by 3.6 percent in 2016 Mu Xuequan March 8, 2017 However, the rise in GDP marked only the end of a technical recession, not the end of the crisis. The recession was the second most severe in the country's history,https://economia.estadao.com.br/noticias/geral,com-revisao-ultima-recessao-deixa-de-ser-a-maior-da-historia,70002628638 Com revisão, última recessão deixa de ser a maior da história Estadão 9 January 2020 1 December 2018 Vinicius Nederhttps://oglobo.globo.com/economia/estagnacao-recessao-ou-depressao-pib-confirma-retomada-mais-fraca-das-ultimas-decadas-23704758 Estagnação, recessão ou depressão? PIB confirma retomada mais fraca das últimas décadas O Globo 9 January 2020 30 May 2019 Gabriel Martins and was followed by the slowest recovery. The GDP only surpassed that of early 2014 by mid-2022. Context Economic thumb|300px|Brazilian bonds had an Inverted yield curve in August 2014 when the 1 year bond got above the 10 year bond #009739 solid 3px 10 year bond #FEDD00 solid 3px 5 year bond #012169 solid 3px 1 year bond thumb|300px|Brazil inflation 1996-2022 Brazil's economy is largely dependent on the export of commodities, particularly iron ore, petroleum and soy. From the late 1990s till 2012, prices for these export commodities rose significantly (partly because of increasing demand from China), resulting in about two decades of economic growth. As a result of the Great Recession, Brazil's GDP dropped sharply and unemployment rose.https://agenciabrasil.ebc.com.br/economia/noticia/2016-05/crise-internacional-e-problemas-internos-sao-causas-do-desemprego-no-brasil Crise internacional e problemas internos são causas do desemprego no Brasil 2016-05-01 Agência Brasil 2020-03-31 During Luiz Inácio Lula da Silva's left-wing presidency from 2003 to 2010, the government redistributed wealth through welfare programs and raised the minimum wage in order to increase consumption.Entenda a crise econômica http://agenciabrasil.ebc.com.br/economia/noticia/2016-05/entenda-crise-economica Agência Brasil 15 May 2016 Giselle Garcia In response to critics of Lula's socialist economic stance, his successor, Dilma Rousseff (president during the crisis), introduced macroeconomic tax exemptions and subsidies. These policies are widely acknowledged as a major factor in the 2014–16 economic crisis. Political The economic crisis was followed and intensified by a political crisis. In 2014, a series of corruption scandals uncovered by Operation Car Wash engulfed many influential politicians. In the presidential election of the same year, President Dilma Rousseff was re-elected to a second term, defeating the PSDB candidate Aécio Neves by a narrow margin.Na disputa mais acirrada da história, Dilma é reeleita presidente do Brasil - 26/10/2014 - Poder http://www1.folha.uol.com.br/poder/2014/10/1537894-dilma-e-reeleita-presidente-do-brasil.shtml Folha de S.Paulo 2019-06-09 The result was not recognized by a section of the opposition and provoked popular discontent.Crise econômica e corrupção marcarão a nova presidência https://brasil.elpais.com/brasil/2014/10/26/politica/1414356634_215134.html EL PAÍS 2014-10-27 2019-06-09 Antonio Jiménez Barca Due to the disputed legitimacy of the election, the Operation Car Wash investigation, and the economic crisis; dissatisfaction with the government became widespread. By 2015, Rousseff's approval rating had plummeted to 8% according to a Datafolha survey.https://www.pewresearch.org/fact-tank/2015/08/17/brazils-corruption-scandal-economy-drive-rousseffs-ratings-to-record-low/ Brazil's corruption scandal, economy drive Rousseff's ratings to record low Pew Research Center 17 August 2015 en-US 2020-03-31http://media.folha.uol.com.br/datafolha/2015/08/06/avaliacao_dilma_agosto_2015.pdf Avaliaçãdo DO Governo Dilma Rousseff Datafolha Instituto 2015 Causes Errors in macroeconomic policy thumb|Cover of The Economist in January 2016 ("Brazil's fall: Dilma Rousseff and the disastrous year ahead"), highlighting the negative aspect of the then-president|upright=0.925 New economic matrix According to Gustavo Franco, President of the Central Bank during the FHC government, the main cause of the crisis was internal and related to "local macroeconomic measures that went wrong."A crise brasileira não vem de fora, ela foi autoinfligida https://brasil.elpais.com/brasil/2015/03/25/economia/1427322429_883162.html El País 27 March 2015 Carla Jiménez Heloísa Mendonça 6 February 2018 A 2017 academic study on the subject arrived at the following conclusion regarding the origin of the crisis:Filho Fernando de Holanda Barbosa A crise econômica de 2014/2017 Estudos Avançados 10.1590/s0103-40142017.31890006 31 89 2017 51–60 0103-4014 1806-9592 University of São Paulo free The exhaustion of the NEM [new economic matrix] due to the loss of the government's financial capacity reduced several investments in the Brazilian economy from 2015 onward, with the sharp reduction in Petrobras' investment being a notable example. The ensuing fiscal sustainability crisis raised country risk, long-term interest rates, and uncertainty, substantially reducing consumption and investment in 2015 and 2016. The reestablishment of prices and the necessary monetary policy to bring inflation back to target also contributed to the recession, mainly due to the loss of credibility of the Central Bank. [...] Filho Fernando de Holanda Barbosa A crise econômica de 2014/2017 https://www.scielo.br/scielo.php?script=sci_arttext&pid=S0103-40142017000100051 Estudos Avançados 6 February 2018 31 89 2017 thumb|left|Guido Mantega, Minister of Finance during the first Dilma government. In July 2012, Mantega admitted for the first time that the government practiced a new "macroeconomic matrix".Mantega indica novo modelo econômico https://economia.estadao.com.br/noticias/geral,mantega-indica-novo-modelo-economico-imp-,896017 Estadão Brasília Beatriz Abreu 5 July 2012 11 December 2019 Previously, the state had played a crucial role in expanding the domestic market through consumer incentives, such as raising the minimum wage, income transfers, and credit expansion. However, by the end of the Lula government, there was a growing perception that this strategy would be unsustainable.Carvalho 2018 11 On May 26, 2011, an article published in Folha de S.Paulo titled "an agreement for the Brazilian industry" reaffirmed the importance of that economic policy of the Lula government but criticized the shrinking share of the national industry in GDP and the substitution of domestic production with imported industrial products. The article was signed, among others, by Paulo Skaf, president of the Federation of Industries of the State of São Paulo (FIESP), who years later would request and support Dilma's impeachment.Carvalho 2018 57Um acordo pela indústria brasileira https://www1.folha.uol.com.br/fsp/opiniao/fz2605201107.htm Folha de S.Paulo 11 December 2019 25 May 2011 Paulo Skaf Artur Henrique Paulo Pereira da Silva Dilma, an economics graduate from an industrialist school, agreed with the demands. Therefore, the new economic matrix was a set of measures to benefit the industrial sector, aiming to reduce the costs of national companies and increase competitiveness against foreign competition. However, the industry did not react. Industrial production, which had grown by 2.7% in 2010, declined by 0.9% and 3.7% in the following two years, damaging government revenue and, consequently, public investments.Carvalho 2018 58 thumb|Joaquim Levy, Minister responsible for fiscal adjustment, in March 2015 In an attempt to reverse the deterioration in public accounts due to falling revenue, a fiscal adjustment was implemented in 2014, which included highly recessive policies (i.e., aimed at reducing expenses and increasing taxes). These policies mainly involved cutting public expenses and investments, such as cuts to the Growth Acceleration Program (PAC). The adjustment continued throughout 2015. In that year, there was a sharp reduction in administered prices. (See section Anticrisis measures.) These measures further deepened the crisis because, according to Carvalho, there was a decrease in public investments.Carvalho 2018 97–98 Additionally, the sharp adjustment of administered prices and the significant depreciation of the currencyTreviz Karina G1 o http://g1.globo.com/economia/mercados/noticia/2015/12/dolar-termina-ultima-sessao-do-ano-em-alta.html Dólar sobe 48% em 2015, maior alta anual em quase 13 anos 2015-12-30 2021-10-12 Mercados pt-br Paulo em São led to soaring inflation, reaching over 10%. This increase, in turn, caused the Selic Rate to rise successively until reaching 14.25% per year.Carvalho 2018 101Carvalho 2018 98 The fiscal adjustment was not successful even in its main objective, which was to achieve a surplus in public accounts, as the recession in which the country found itself reduced government revenues.Costas Ruth Como se chegou à pior recessão desde os anos 90? https://www.bbc.com/portuguese/noticias/2015/12/151201_pib_terceirotri2015_ru BBC 10 October 2021 1 December 2015 Commodities Devaluation Commodity price shocks#Second half of 2014 Average annual growth ofcommodity pricesIMF (Primary Commodities Price Index). Data extracted from the book "A Valsa Brasileira" (see bibliography)PeriodChange(% per year)1999-200210.32003-200519.12006-201010.52011-20142015-2016 An external cause identified was the slowdown of the Chinese economy, Brazil's largest trading partner. This slowdown led to a sharp drop in commodity prices, which are the basis of Brazilian exports. As a result, Brazil's trade surplus plummeted and some exporting companies, such as Usiminas and Vale, suffered heavy losses. According to Roberto Dumas, a professor at Insper, the government made a strategic mistake during the commodity supercycle by stimulating consumption instead of prioritizing industrialization and improving productive capacity.Estadão https://infograficos.estadao.com.br/public/economia/por-que-o-brasil-parou/ Por que o Brasil Parou? 2021-10-12 Estadão According to Steven Tobin from the International Labour Organization (ILO) Research Department, the decrease in external demand, especially from China, combined with the fall in commodity prices in the second half of 2014, were factors that contributed to the crisis. However, Tobin also stated that this unfavorable external scenario revealed structural weaknesses in the country, such as low productivity.Crise internacional e problemas internos são causas do desemprego no Brasil https://agenciabrasil.ebc.com.br/economia/noticia/2016-05/crise-internacional-e-problemas-internos-sao-causas-do-desemprego-no-brasil Agência Brasil 1 May 2016 Mariana Branco 30 June 2017 Between June and December 2014, the commodity price index published by the International Monetary Fund (IMF) experienced a cumulative decline of 29.3%, which continued to increase until it was interrupted in January 2016.Carvalho 2018 95 In 2015, The Economist magazine also stated that the immediate causes of the crisis were external,Causas imediatas da crise econômica brasileira são externas, diz The Economist https://noticias.r7.com/economia/causas-imediatas-da-crise-economica-brasileira-sao-externas-diz-the-economist-30102015 R7 30 June 2017 30 October 2015 and that the decline in commodity prices partly explained the crisis.Capa da 'Economist' alerta para queda do Brasil e prevê desastre em 2016 https://oglobo.globo.com/economia/capa-da-economist-alerta-para-queda-do-brasil-preve-desastre-em-2016-18384376 O Globo 30 June 2017 30 December 2015 The publication also argued that then-president Dilma Rousseff could have made better use of the commodity boom of the 2000s to reduce the bloated state, which consumed 36% of GDP in taxes. Instead, the government chose to guarantee subsidized loans and costly tax incentives for favored industries. Silvia Matos, a researcher at the Brazilian Institute of Economics (FGV), concluded that external factors were responsible for 30% of the crisis. Silvia Matos shows [...] through a comparative analysis that, although other economies have also experienced a growth reduction in recent years, the Brazilian deceleration was more intense. This occurred even when compared to Latin American countries, which form a natural control group for performance comparisons. Then, she confirms this diagnosis through an econometric analysis of panel data with a sample of 14 emerging countries. In fact, the results indicate that only 30% of the Brazilian deceleration can be explained by external factors. Based on this, Silvia Matos concludes that factors specific to our economy are the most relevant in explaining the worsening performance of the Brazilian economy https://books.google.com/books?id=MjY8DwAAQBAJ A Crise de Crescimento do Brasil FGV 4 April 2017 Elsevier Brasil 9788535266382 Brazil Political Crisis Dilma Rousseff government Operation Car Wash Impeachment of Dilma Rousseff Michel Temer government 2013 protests in Brazil 2014 Brazilian general election 2015–2016 protests in Brazil In the international context of major protests following the 2008 financial crisis, such as the Arab Spring in the Arab world, Occupy Wall Street in the United States, and Los Indignados in Spain,https://www.bbc.co.uk/portuguese/noticias/2013/06/130623_protestos_pressreview_bg.shtml Protestos globais crescem com perda de fé na política e no Estado BBC Brasil 23 June 2013 25 June 2013 Brazil experienced major protests in 2013, the largest since the demonstrations for the impeachment of Fernando Collor in 1992.https://www1.folha.uol.com.br/cotidiano/2013/06/1296834-protesto-em-sao-paulo-e-o-maior-desde-manifestacao-contra-collor.shtml Protesto em São Paulo é o maior desde manifestação contra Collor Folha de S.Paulo 17 June 2013 18 June 2013 The protesters initially challenged increases in public transportation fares but later questioned the hosting of FIFA mega-events (Confederations Cup and World Cup)17 June 2013 Contra a Fifa e serviço de ônibus, 12 mil manifestantes fecham a praça Sete em Belo Horizonte https://noticias.r7.com/minas-gerais/contra-a-fifa-e-servico-de-onibus-12-mil-manifestantes-fecham-a-praca-sete-em-belo-horizonte-17062013 R7.com and political corruption. In response, the federal government announced measures to try to address the protesters' demandshttps://noticias.uol.com.br/cotidiano/ultimas-noticias/2013/06/21/em-pronunciamento-dilma-diz-que-chamara-prefeitos-e-governadores-para-discutir-mobilidade-urbana.htm Dilma diz que receberá líderes de protestos e propõe pacto para melhorar transporte, educação e saúde UOL 21 June 2013 and the National Congress of Brazil passed a series of concessions, known as the "positive agenda."https://g1.globo.com/politica/noticia/2013/08/como-ficou-agenda-positiva.html Como ficou a 'agenda positiva' 29 August 2013 globo.com thumb|left|Dilma Rousseff at her inauguration as president in 2015, alongside her vice president, Michel Temer The following year, in 2014, the Operation Car Wash investigation began, revealing a vast corruption scheme involving the political class and parties. The re-election of Dilma Rousseff a few months later exacerbated the political crisis. Running for a second term as a candidate for the Workers' Party, Dilma won the presidential election that year, defeating the candidate from the Brazilian Social Democracy Party (PSDB), Aécio Neves, in the most fiercely contested presidential race in the country's history at that time.Na disputa mais acirrada da história, Dilma é reeleita presidente do Brasil https://www1.folha.uol.com.br/poder/2014/10/1537894-dilma-e-reeleita-presidente-do-brasil.shtml 17 June 2017 Folha de S.Paulo 26 October 2014 The election was also marked by turmoil and controversies, mainly due to Operation Car Wash.NY Times: brasileiros lamentam campanha eleitoral feia https://www.dci.com.br/politica/ny-times-brasileiros-lamentam-campanha-eleitoral-feia-id423083.html 17 June 2017 26 October 2014 The New York TimesMay 2023 In this context of political crisis, the Congress began to vote on measures that could generate more expenses for the government. These were called "bills bombs" (pautas-bomba). If the president vetoed any of these bills, the President of the Chamber of Deputies, Eduardo Cunha, would entertain an impeachment request against her. These bills were used as instruments of blackmail. The proposed spending increases voted by Congress occurred at the same time the government intended to make cuts to achieve the fiscal target for the year. In a scenario of an economy in crisis, this hindered the rebalancing of public accounts by increasing state expenses and making the economic adjustments proposed by Dilma unviable.Bernoulli 2021 135https://m.folha.uol.com.br/mercado/2015/08/1664711-saiba-o-que-sao-as-pautas-bomba-nas-maos-do-congresso-contra-o-governo.shtml Saiba o que são as 'pautas-bomba' nas mãos do Congresso contra o governo - 05/08/2015 - Mercado - Folha de S.Paulo 2021-10-12 m.folha.uol.com.br In December 2015, after the PT voted for the impeachment of Eduardo CunhaBernoulli 2021 135 (who was involved in corruption scandals), he accepted an impeachment request against Dilma for alleged crime of responsibility.Eduardo Cunha accepts impeachment request against Dilma Rousseff https://politica.estadao.com.br/noticias/geral,eduardo-cunha-aceita-pedido-de-impeachment-contra-dilma-rousseff,10000003662 June 17, 2017 Estadão December 2, 2015 Gadelha Cardoso Sorg Carvalho On May 12, 2016, the Federal Senate removed her from the presidency for 180 days. Immediately, her vice-president Michel Temer assumed the position temporarily.Dilma will be removed from office for up to 180 days; Temer assumes presidency Mariana Jungmann https://agenciabrasil.ebc.com.br/politica/noticia/2016-05/dilma-sera-afastada-do-cargo-por-ate-180-dias-temer-assume-presidencia June 17, 2017 Agência Brasil May 12, 2016 Even though he was acting president but behaving as if he were the definitive president,Temer: "I don't behave as if I were interim, I behave as if I were definitive" https://www.em.com.br/app/noticia/politica/2016/06/21/interna_politica,775311/em-entrevista-temer-diz-que-se-comporta-como-presidente-definitivo.shtml Estado de Minas May 21, 2019 June 21, 2016 Temer established his government plan and made "stopping the free fall in economic activity" a priority in his first speech as president.Read the full transcript of Temer's first speech as acting president https://g1.globo.com/politica/processo-de-impeachment-de-dilma/noticia/2016/05/veja-integra-do-primeiro-discurso-de-temer-como-presidente-em-exercicio.html G1 13 May 2016 May 7, 2020Brazil, my friends, is currently going through its worst economic crisis. There are 11 million unemployed, double-digit inflation, a deficit of nearly R$100 billion, recession, and also a serious chaotic situation in public health. Our biggest challenge is to stop the free fall in economic activity, which has led to increased unemployment and the loss of well-being of the population. Michel Temer However, early in his government, Temer became involved in controversies due to his ministers who were being investigated in the scope of Operation Car Wash, as well as himself.https://zh.clicrbs.com.br/rs/noticias/politica/noticia/2016/06/lava-jato-leia-a-integra-da-delacao-premiada-de-sergio-machado-que-cita-michel-temer-6003084.html Lava-Jato: read the full text of Sérgio Machado's plea bargain that mentions Michel Temer June 15, 2016 June 17, 2017 ClicRBS The scandals affected the progress of the government's proposed reforms aimed at economic recovery.https://exame.com.br/brasil/acusacao-contra-temer-pode-ter-impacto-direto-nas-reformas/ Accusations against Temer may have a direct impact on reforms May 17, 2017 June 17, 2017 Not only did they affect the progress itself, but they also required Temer to allocate many resources to maintain his allied base cohesive. The total amount of funds released in 2017 for parliamentary amendments (a legal mechanism used for political negotiations) increased from 959 million to 1.5 billion reais just in June, the month following the JBS scandal.Carvalho 2018 138 All the corruption scandals involving the Temer government, combined with the unpopular reform proposals, caused Temer's approval rating, according to CNI/Ibope polls, to drop to 3 percent in September 2017, even lower than Dilma's.https://agenciabrasil.ebc.com.br/politica/noticia/2017-09/popularidade-de-temer-tem-3-de-aprovacao-diz-pesquisa-cniibope Temer's popularity has 3% approval, says CNI/Ibope poll November 19, 2017 Agência Brasil 28 September 2017 Therefore, Dilma's impeachment and the beginning of the Temer government were not able to halt the political crisis or the economic crisis. The persistence of the political crisis continued to hinder economic recovery because the scandals affect the markets, especially those subject to short-term speculative movements, such as the stock market and the foreign exchange market, which are the first to react.https://www.gazetadopovo.com.br/opiniao/artigos/a-crise-politica-e-seus-impactos-sobre-a-economia-dw1dfff5yzml8jcfcbtiuezzq/ The political crisis and its impact on the economy June 25, 2017 January 11, 2018 Gazeta do Povo Marcelo Curadohttps://www1.folha.uol.com.br/mercado/2017/05/1885077-entenda-o-impacto-da-crise-no-governo-na-economia.shtml Understanding the impact of the crisis on the economy May 18, 2017 January 11, 2018 Folha de S.Paulo São Paulo Although Temer survived, his image was damaged. Several popular protests questioned whether he could remain in office.Group protests against Temer in Brasília https://politica.estadao.com.br/noticias/geral,grupo-faz-protesto-contra-presidente-em-brasilia,70001790465 May 17, 2017 June 17, 2017 Economic Impacts of Operation Car Wash Operation Car Wash mainly affected the construction and oil sectors.Carvalho 2018 98 A study by the Dieese, published in March 2021, indicated that about 4.4 million jobs were lost in the country from 2014 to 2017 as a result of Operation Car Wash. Of these, 1.1 million were in the construction sector.https://www.poder360.com.br/lava-jato/lava-jato-acabou-com-44-milhoes-de-empregos-aponta-dieese/ Operation Car Wash ended 4.4 million jobs, according to Dieese March 16, 2021 October 12, 2021 Poder360 During the same period, the sector recorded a negative balance between hirings and dismissals of 991,734 formal positions.https://valor.globo.com/opiniao/coluna/consequencias-economicas-da-operacao-lava-jato.ghtml Economic Consequences of Operation Car Wash October 12, 2021 Valor Econômico 28 August 2019 subscription According to a study published in 2018 by the Independent Fiscal Institution, since the beginning of 2014, the construction industry experienced 14 quarters of negative results, with a negative impact of 0.9 percentage points per quarter. The study also pointed out that the sector was a limiting factor to the recovery trajectory of industrial GDP and economic activity in aggregate terms.https://www.conjur.com.br/dl/ifi-senado-construcao-civil-lava-jato.pdf RAF - Fiscal Monitoring Report June 11, 2018 October 11, 2021 Some consultancies estimated that the economic contraction caused by Operation Car Wash would be around 1% to 1.5% of the GDP per year.https://www.istoedinheiro.com.br/lava-jato-esta-corroendo-o-pib-e-dai/ Operation Car Wash is corroding the GDP. So what? June 2, 2017 January 11, 2018 Istoé Dinheiro Editora três Luís Artur Nogueira The direct and indirect effects of Operation Car Wash on the country's economy may have caused, according to a projection by the consulting firm Go Associados for 2015, a contraction of more than 140 billion reais in the country's economy.https://g1.globo.com/economia/noticia/2015/08/impacto-da-lava-jato-no-pib-pode-passar-de-r-140-bilhoes-diz-estudo.html Impact of Operation Car Wash on GDP could exceed 140 billion reais, says study August 18, 2015 January 11, 2018 G1 Luís Artur Nogueira According to a study by consultancy Tendências, the recession could be three times smaller without the impacts of the operation on the economy.Paulo Ruth CostasDa BBC Brasil em São http://g1.globo.com/economia/noticia/2015/12/sem-lava-jato-recessao-poderia-ser-3-vezes-menor-dizem-consultorias.html Without Operation Car Wash, recession could be 3 times smaller, say consultancies December 2, 2015 October 12, 2021 Economia Consequences Unemployment thumb|355px|The unemployment rate from 2012 to 2017. Each vertical line corresponds to a month.https://br.advfn.com/indicadores/pnad https://web.archive.org/web/20171106064226/https://br.advfn.com/indicadores/pnad dead 2017-11-06 Desemprego Pnad IBGE 2017-11-06 2017-11-26 Before the recession, Brazil's unemployment rate hovered around 6.8% for most of 2014, but began increasing in February 2015, resulting in a 2015 average of 8.5%. The economy lost more than 1.5 million jobs throughout 2015, fueling public discontent against the political establishment and the political leadership of the Worker's Party and President Dilma Rousseff.https://www.bloomberg.com/news/articles/2016-03-15/brazil-s-unemployment-jumps-in-2015-adding-to-rousseff-s-woes Brazil's unemployment jumps in 2015, adding to Rousseff's woes Bloomberg 15 March 2016 The unemployment rate continued to rise throughout 2016 to finish the year at 12.0%, with 12.3 million people unemployed and an estimated 2.8 million private-sector jobs cut over the preceding two years.https://www.reuters.com/article/us-brazil-economy-employment-idUSKBN15F1LE Brazil's jobless rate ends 2016 at 12 percent with 12.3 million unemployed Reuters 1 February 2017 Young people were affected most by the worsening job market. While the overall unemployment rate was 12.7% in the first quarter of 2019, the rate in people from 14 to 17 years was 44.5% and 27.3% for people from 18 to 24 years. Experts expressed concern for the unintended economic and social repercussions for Brazil's younger population, as the economic crisis decreased social security contributions and depreciated human capital (caused by the decrease in the technical capacity of future workers).Desemprego deixa herança maldita aos jovens e cicatrizes no país https://exame.abril.com.br/economia/desemprego-deixa-heranca-maldita-aos-jovens-e-cicatrizes-no-pais/ Exame 28 June 2019 Ligia Tuon 18 November 2019 Recession 355px|thumb|Change in GDP from 2010 to 2016 in Brazil.Economia encolhe 3,6% em 2016 e país tem pior recessão da história 7 March 2017 https://oglobo.globo.com/economia/economia-encolhe-36-em-2016-pais-tem-pior-recessao-da-historia-21022917 6 June 2017 Growth slowed significantly in 2014 which was followed by two consecutive drops.(Note: The values for 2015 and 2016 were later revised to 3,5% and 3,3%, respectively.) At the end of the second quarter of 2014, the country was in a technical recession. According to some Brazilian economists, a technical recession is negative economic growth for two consecutive quarters. It is different from an actual recession, in which the situation of the country depreciates significantly.Entenda o que a recessão técnica significa para a economia https://economia.estadao.com.br/noticias/geral,entenda-o-que-a-recessao-tecnica-significa-para-a-economia,384664 Estadão Alessandra Corrêa 9 June 2009 Finance Minister, Guido Mantega, lessened the economic result and, in comparison to Europe, declared that: [In Brazil] we're talking about two trimesters [of negative GDP growth], and we know that the economy is in motion. Recession is when there are rising unemployment and decreasing income. Here we have the opposite. Guido Mantega, Finance Ministerhttp://g1.globo.com/economia/noticia/2014/08/entenda-o-que-e-recessao-tecnica.html G1 29 August 2014 7 December 2016 Entenda o que é recessão técnica São Paulo Regardless of Mantega's statements, specialists had already spotted signs that a strong recession was well underway, citing the technical recession and later, the small growth of 0.5% at the end of 2014. The expectations were confirmed in the next year when the economy shrunk by 3.5%. In 2016, there was another sharp decrease of 3.3%.Como o Brasil entrou (e pode sair) da maior recessão da história http://exame.abril.com.br/economia/como-o-brasil-entrou-e-pode-sair-da-maior-recessao-da-historia/ 24 June 2017 EXAME 7 March 2017 João Pedro CaleiroComo o Brasil entrou, sozinho, na pior crise da história Época 24 June 2017 Graziele Oliveira Marcos Coronato http://epoca.globo.com/ideias/noticia/2016/04/como-o-brasil-entrou-sozinho-na-pior-crise-da-historia.html 4 April 20163 July 2017 Brasil vive a pior recessão da história http://g1.globo.com/jornal-hoje/noticia/2017/03/brasil-vive-pior-recessao-da-historia.html 2017-06-01 Jornal Hoje Renata Capucci Larissa Castro In the first trimester of 2017, the GDP rose for the first time after eight consecutive trimesters of negative growth.2017-06-01 PIB do primeiro trimestre cresce 1% após oito quedas seguidas pt First quarter GDP grows 1% after eight straight falls http://g1.globo.com/jornal-nacional/noticia/2017/06/pib-do-primeiro-trimestre-cresce-1-apos-oito-quedas-seguidas.html Jornal Nacional 24 June 2017 The recession caused a fiscal crisis and an increasing budget deficit which, according to Bloomberg, was "the largest-ever primary budget gap ... as a two-year economic recession sapped tax collection while expenses grew further."https://www.bloomberg.com/news/articles/2016-03-30/brazil-posts-largest-budget-deficit-for-february-ever Brazil posts largest budget deficit for February ever Bloomberg 30 March 2016 18 May 2016 The government deficit reached 5.8 billion reais (US$1.7 billion) in the first three months of 2016, the widest reported since December 2001. The two-year fiscal deterioration can be explained by the decrease in government revenue from taxes as a result of the recession, while government expenses have been growing constantly.https://www.bloomberg.com/news/articles/2016-04-29/brazil-records-worst-ever-first-quarter-budget-deficit Brazil records worst-ever first quarter budget deficit Bloomberg 29 April 2016 18 May 2016 Increase in economic inequality 355px|thumb|Evolution of the Gini coefficient in Brazil from 2012 to 2019. Source: Ibre/FGV A 2019 study by the Instituto Brasileiro de Economia (IBRE), part of Fundação Getúlio Vargas (FGV), obtained by the magazine Valor Econômico, showed that the Gini coefficient, which measures the economic inequality in society from 0 to 1, had increased year after year since 2015 and reached its peak in March 2019. In seven years, the accumulated wealth of the top 10% rose by 8.5%, while that of the 40% poorest dropped 14%. The research showed that people with lower incomes suffered the effects of the crisis more intensely and recovered from the crisis slower.Desigualdade de renda no Brasil atinge o maior patamar já registrado, diz FGV/IBRE https://g1.globo.com/economia/noticia/2019/05/21/desigualdade-de-renda-no-brasil-atinge-o-maior-patamar-ja-registrado-diz-fgvibre.ghtml G1 2019-05-22 21 May 2019Desigualdade de renda no Brasil sobe pelo 17º trimestre consecutivo https://www.valor.com.br/brasil/6265917/desigualdade-de-renda-no-brasil-sobe-pelo-17-trimestre-consecutivo Valor Econômico 2019-05-19 2019-05-22 Bruno Villas Bôas Rio de JaneiroLevantamento do FGV IBRE aponta desigualdade recorde na renda do trabalho FGV IBRE survey points to record inequality in labor income https://blogdoibre.fgv.br/posts/levantamento-do-fgv-ibre-aponta-desigualdade-recorde-na-renda-do-trabalho IBRE/FGV 23 May 2019 27 January 2022 pt According to an Ibre researcher, Daniel Duque, the recovery of the job market benefited the most qualified and experienced, reinforcing inequality. Many underqualified people gave up trying to get a job, and the loss of hope was at a "[...] record high, and it helps to explain why, even after the decrease in unemployment, inequality kept rising." Emigration Brazilian diaspora thumb|355px|Number of declarations of definite emigration from the country. Source: Receita Federal.Cresce número de brasileiros que decidem viver no exterior; países oferecem oportunidades de emprego https://g1.globo.com/economia/concursos-e-emprego/noticia/2019/04/03/cresce-numero-de-brasileiros-que-decidem-viver-no-exterior-paises-oferecem-oportunidades-de-emprego.ghtml G1 Luiz Guilherme Gerbelli 25 October 2019 3 April 2019 The number of declarations of definitive departure from the country began to grow in the first year of crisis and has increased steadily ever since, according to Receita Federal. Among the countries that received the most Brazilian citizens were the United States, Japan and Canada, which, due to low unemployment and aging populations among other reasons, needed a boost to decrease the age of the workforce. Another destination was Portugal, which conceded Portuguese citizenship to 8,000 Brazilians only in 2016, according to Eurostat.Brasileiros foram os que mais receberam nacionalidade portuguesa em 2016 https://exame.com.br/brasil/brasileiros-foram-os-que-mais-receberam-nacionalidade-portuguesa-em-2016/ 9 April 2018 Agência Brasil pt 28 March 2021 Besides the crisis, another reason for the emigration were the elevated levels of criminality.Mais de 80 mil brasileiros migram para Portugal em busca de segurança https://exame.com.br/brasil/mais-de-80-mil-brasileiros-migram-para-portugal-em-busca-de-seguranca/ pt 28 March 2021 EXAME Agência Brasil 8 May 2018 According to a JBJ Partners employee (a company specialized in expatriation to the United States), many who fled Brazil were qualified workers: We're talking about qualified people. The profile of the immigrant is no longer that of the poor individual looking for better opportunities. They are high executives, who are abandoning their careers to open a business abroad, people with Ph.D., which is sad because the country is losing resources. Jorge Botrel, a JBJ partner.Com a crise, dispara a quantidade de brasileiros que desistem de viver no Brasil https://g1.globo.com/economia/noticia/com-a-crise-dispara-a-quantidade-de-brasileiros-que-desistem-de-viver-no-brasil.ghtml G1 25 October 2019 17 December 2017 Luísa Melo An OECD report shows an even higher number Stub sentence - needs comparative material April 2020 . In 2016 80,000 Brazilians emigrated legally to one of the member states of the OECD, whereas 99,000 did so in 2017. Similarly, data from Receita Federal shows that the number of people leaving Brazil increased in consecutive years since the beginning of the crisis.Imigração de brasileiros para países da OCDE subiu 24%, o terceiro maior aumento https://brasil.elpais.com/brasil/2019/09/18/politica/1568843366_553673.html El País Felipe Betim 25 October 2019 19 September 2019 Credit rating This is a table of the credit ratings of the Brazilian economy according to Trading Economics.April 2017April 2017 Agency Rating Outlook Date Fitch BB negative May 5, 2016 TE 34 negative Apr 16 2016 Moody's Ba2 negative Feb 24 2016 S&P BB negative Feb 17 2016 Anti-crisis measures Henrique Meirelles, the Minister of Finance from May 2016 to April 2018|thumb Since the impeachment of Dilma Rousseff and Michel Temer's subsequent rise to power, several measures, most of which are unpopular, were implemented or proposed to get the economy back on track.'Aproveito impopularidade para tomar medidas necessárias', diz Temer http://www1.folha.uol.com.br/poder/2016/12/1843702-aproveito-impopularidade-para-tomar-medidas-necessarias-diz-temer.shtml Folha de S.Paulo 22 December 2016 17 June 2017 Marina Dias Valdo Cruz Brasília The most important of which were: The 95º Constitutional amendment pt Emenda Constitucional do Teto dos Gastos Públicos (a.k.a. "new fiscal regime"): Constitutional amendment which established a "ceiling" (upper limit) to government spending for the next 20 years;Temer elogia aprovação da PEC do Teto e minimiza menor número de votos a favor http://agenciabrasil.ebc.com.br/politica/noticia/2016-12/temer-elogia-aprovacao-da-pec-do-teto-e-minimiza-menor-numero-de-votos 17 June 2017 Brasília Agência Brasil 13 December 2016 Paulo Victor Chagas The Outsourcing law, which allows companies to hire outsourced employees to work on primary activities, and not just secondary activities (such as security or cleaning);Com vetos, Temer sanciona lei que permite terceirização de atividade-fim http://agenciabrasil.ebc.com.br/politica/noticia/2017-03/temer-sanciona-lei-que-permite-terceirizacao-em-atividade-fim-das-empresas 17 June 2017 Agência Brasil 31 March 2017 Ivan Richard Esposito Brasília The 2017 labor reform, a significant change in the Consolidation of Labor Laws; andCom flexibilização de vários pontos da CLT, reforma trabalhista divide opiniões http://agenciabrasil.ebc.com.br/politica/noticia/2017-04/com-flexibilizacao-de-varios-pontos-da-clt-reforma-trabalhista-divide 17 June 2017 Agência Brasil São Paulo 13 April 2017 Daniel Mello a pension reform, which the government failed to approve.Governo desiste da votação da Previdência e anuncia nova pauta prioritária no Congresso https://g1.globo.com/politica/noticia/governo-desiste-da-votacao-da-previdencia-e-anuncia-nova-pauta-prioritaria-no-congresso.ghtml G1 26 May 2019 19 February 2018 Guilherme Mazui Roniara Castilhos One year after the labor reform was approved, however, it was verified that the decrease in unemployment was minimal, while the contracts of intermittent, outsourced and temporary labor increased.Fabiana Futema 10 November 2018 Um ano depois, reforma trabalhista não gera empregos esperados https://veja.abril.com.br/economia/um-ano-depois-reforma-trabalhista-nao-gera-empregos-esperados/ VEJA.com 2019-05-26 Recovery section January 2023 In early 2017, there were already signals that the economy was beginning to recover, however, it was agreed that the process would be long and slow.Recuperação da economia brasileira será longa e lenta, aponta 'FT' http://economia.estadao.com.br/noticias/geral,recuperacao-da-economia-brasileira-sera-longa-e-lenta-aponta-ft,70001658076Recuperação da economia brasileira ainda é lenta, diz presidente do Itaú http://www1.folha.uol.com.br/mercado/2017/04/1876544-recuperacao-da-economia-brasileira-ainda-e-lenta-diz-presidente-do-itau.shtml In June 2017, a 1% rise in GDP in the first quarter of the year was reported. It was the first rise of the GDP after eight consecutive falls (two years). PIB do Brasil cresce 1% no 1º trimestre de 2017, após 8 quedas seguidas http://g1.globo.com/economia/noticia/pib-do-brasil-cresce-10-no-1-trimestre-de-2017.ghtml Minister of Finance Henrique Meirelles said that the country had left the "greatest recession of the century."PIB sobe 1% no 1º trimestre, após oito quedas consecutivas http://economia.estadao.com.br/noticias/geral,pib-sobe-1-0-no-1-trimestre-apos-oito-quedas-consecutivas,70001821658 However, economists say that the growth characterizes only the end of the "technical recession" and that it is still too early to claim that the crisis is over, given that unemployment remains high and there's still widespread uncertainty regarding the future of the economy, especially in the aftermath of the recent political scandals.PIB positivo é 'saída técnica' da recessão, mas recuperação é incerta; entenda June 2017 http://g1.globo.com/economia/noticia/pib-positivo-e-saida-tecnica-da-recessao-mas-recuperacao-e-incerta-entenda.ghtml 5 June 2017 Comparison with other crises thumb|Real GDP growth in 2016. Source: CIA World FactbookThe World Factbook — Central Intelligence Agency https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html Central Intelligence Agency (CIA) 2020-02-29 2017-07-01 https://web.archive.org/web/20170701201952/https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html dead|355px In countries with similar size and wealth, there were a few, but less severe crises in the same period. In 2015, among OECD countries, only Russia went through a recession. Even after the economic sanctions imposed by other countries due to the Russo-Ukrainian war, Russia's GDP fell by only 4% in two years (2015 and 2016). Few other countries in this period were going through a recession, which reinforces the argument that the crisis in Brazil was mainly due to local causes.Carvalho Laura https://books.google.com/books?id=XppWDwAAQBAJ Valsa brasileira: Do boom ao caos econômico 2018-05-08 Editora Todavia S.A 978-85-93828-63-8 pt-BR In comparison to other crises in Brazil, it was verified that the 2014 crisis was not the deepest recession of Brazilian history, as previously thought. After the GDP values for 2015 and 2016 were reviewed by the Brazilian Institute of Geography and Statistics (IBGE), the economy shrank by 8.2% in the period, in contrast to the 8.5% in the 1981 recession. Despite the relative mildness, the crisis was prolonged, being followed by the slowest economic recovery in Brazilian history. According to Codace (committee part of Fundação Getúlio Vargas), the 1981 crisis lasted nine economic quarters, reached its peak in the first quarter of 1983 and, since then, took seven quarters for the GDP the reach its pre-crisis level. Later, the 1989-1992 crisis lasted 11 quarters and the recovery time was the same: seven quarters. This crisis, however, had a lower intensity, with an accumulated decrease in the GDP of 7.7%. In turn, Brazil's GDP after the 2014 crisis was expected to reach the pre-crisis level in 2022, according to an optimistic estimate, with 20 quarters of recovery in total. When taking into account both GDP and the employment rate, the recovery from this economic crisis would be measured as taking longer. In addition to the sluggish recovery, the new jobs will likely be of lower quality, including informal and autonomous labor. See also List of economic crises in Brazil Brazil labor reform (2017) Economy of Brazil 2018 in Brazil References 2 Works cited Bernoulli 2a Série Ciências Humanas e Linguagem – Volume 4 Editora DRP Ltda 2021 Belo Horizonte Capítulo 8: Nova República Geraldo Magela Edriano Abreu Isabel Cristina Leite Viviane Silva Gonzaga Bernoulli 2021 Category:2014 in economic history Category:2014 in Brazil Category:Economic crises in Brazil Category:Recessions Category:Government of Michel Temer Category:Economic history of Brazil