Brazil’s biggest trading partner is China, but as China’s economy has slowed, Brazil’s economy has deteriorated. In August 2015, consumer confidence in Brazil is at a record low, unemployment has increased to 8.3 percent, inflation is nearing 10 percent, and corruption scandals have left President Dilma Rouseseff with approval ratings below 10 percent. Analysts expect Brazil’s gross domestic product (GDP) number being released 9-4-15 to show that country to officially be in recession. Demand for Brazil’s commodities, especially soybeans and iron ore, has declined sharply, so Brazilian businesses are laying off workers and cutting spending. Lower commodity prices have cost Brazil $12 billion in foreign sales through the first half of 2015 alone. Brazil’s currency, the real, has declined 30 percent versus the US dollar in the last twelve months; Brazil’s stock market is down 22 percent in the last twelve months; Brazil’s economy is shrinking at about 1.7 percent annually. Economists now predict prolonged stagnation for Brazil. Marcos Troyjo, a former Brazilian diplomat who now is at Columbia University, says: “We went from Brazil mania to Brazil nausea; we are now looking at a lost decade.” Instead of negative growth, Brazil reported 7+ percent annual GDP growth in 2010 -2012 making it a BRIC (Brazil, Russia, India, China) high performer. But that was then. Also hurting Brazil now has been the fall in oil prices since that country is (or was) a big exporter of oil.

Source: Based on Jeffery Lewis and Rogerio Jelmayer, “Brazil’s Woes Deepen Along with China’s,” Wall Street Journal, August 26, 2015, A10. Also, John Lyons and Paul Kiernan, “Brazil’s Big Bet on China Turns Sour,” Wall Street Journal, August 28, 2015, A1.