Brazil has slipped deeper into crisis over the past month. The slump in the real economy has gathered pace, with our GDP Tracker now suggesting the output could have contracted by up to 4% y/y in Q3. Meanwhile, the political crisis enveloping President Rousseff is intensifying. The past month has seen what could be the first credible petition for her impeachment presented to the House of Representatives. The fact that it has come from one of the founding members of her own party underscores the extent of political discord in the country. Add a deteriorating fiscal position and mounting concerns about the outlook for the country’s largest export market (China) to the mix and it’s no surprise that Brazil’s financial markets have sold off heavily over the past month.
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