There is great risk of a negative GDP in Brazil in 3Q. Analysts said that a potential economic contraction between July and September will reflect the drop in confidence of consumers and businesses, bad performance of the industry due to higher levels of inventory and the impact of the recent rise in interest rates.

According to Sergio Vale from MB Associados, 2Q GDP should present growth of 1.1% while 3Q GDP should contract 0.2%. “The probability of a negative GDP in the third quarter before June was 10%, but now it’s 80%.”

Fernando Genta from MCM believes that the probability of negative GDP in the third quarter is around 40%. He estimates that the Brazilian economy will grow 1% in 2Q and 0% in 3Q.

Sergio Vale said that these low numbers creeping close to zero seem increasingly likely over the coming quarters. And 2014 should be even worse, given the “government’s belief that it’s okay.”

Source: Estado

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