Brazil's Economy experience Difficulties- Analysts

Analysts had expected a contraction, but the number was worse than expected.

 

First quarter output was also revised down to show a 0.7%, rather than a 0.2%, contraction.

The country, the seventh-largest economy in the world, has seen economic growth fall sharply in recent times.

This is due in part to low commodity prices and sluggish global growth.

High interest rates - currently 14.25% - have also affected consumer spending, an important element of Brazil's economy, while this year, the government has introduced stringent austerity measures designed to tackle high levels of debt.

Government spending, including on unemployment benefits, has fallen sharply, while taxes have risen.

Widespread falls

In the second quarter, household spending fell by 2.1% compared with the previous three months. The biggest falls came in the industrial sector, where construction output fell 8.4%

Transport, storage, postal services, financial services and insurance all saw falls in output.

Compared with a year earlier, the economy as a whole shrank by 2.6%.

The technical definition of a recession is two consecutive quarters of economic contraction.