Brazil faces strong headwinds, worst economic recession ever

Brazil is facing strong headwinds, leading to the worst ever economic recession the country had ever faced on account of numerous structural constraints that pose serious threats to the potential growth of the country.

Weakness of productive investment and the loss of industrial competitiveness linked mainly to the lack of skilled labor force, high wage inflation and the country’s poor infrastructure, and a difficult business environment are few hurdles that are restricting growth of the economy.

Further, policy mistakes right from 2011 until 2014 are also weighing on the country’s performance and future growth caliber.

Unfavorable global developments, mainly the end of China’s hyper cycle and of the commodity super cycle, as well as the anticipation by the markets of the normalization of monetary policy in the US since mid-2013 is also pressurizing the Brazilian economy.

It seems that these global headwinds will take a long way for the Brazilian economy to evolve out of its contraction cycle.