Brazil

Brazil’s recession deepened in the third quarter into what economists say is the country’s worst crisis since the Great Depression, as political gridlock and a giant corruption scandal have halted investment and forced consumers to pare spending to the bone, The Wall Street Journal reported. Gross domestic product shrank 4.5% in the third quarter from a year earlier, the biggest contraction since Brazil started measuring GDP by the current system in 1996, Brazil’s statistics agency said Tuesday.

A spiraling economic crisis has pushed Brazil’s emerging middle class to the brink, The Wall Street Journal reported. Urban unemployment rose to 7.6% in September, tied with August for the highest rate in more than five years. Inflation approaching 10% has forced the poor to stop buying meat and the central bank to ratchet up interest rates. A disorganized effort by the government to stem a widening budget deficit has resulted in painful tax increases, further crimping family budgets.

In Brazil, many captains of finance are unwilling to risk upsetting the government by expressing their concerns publicly about the country’s economic crisis. Don’t put Jose Olympio Pereira in that group. Just seconds into an interview in Sao Paulo last week, the CEO of Credit Suisse Group AG’s Brazil unit made his views crystal clear when, in response to a question about the state of affairs in the country, he replied: "we are very bad." And when he says "very bad," he means it.

Brazilian President Dilma Rousseff, who is struggling to get the country’s Congress to pass legislation meant to curb a widening budget gap, faces more resistance from members of her own party than almost any other grouping, according to a recent survey of lawmakers, The Wall Street Journal reported. Ms. Rousseff’s left-wing Workers’ Party is reluctant to embrace spending cuts and tax increases and favors stimulus policies instead, according to the poll of members of the lower house of Brazil’s Congress by political consultancy firm Mosaico.

Embattled Brazilian President Dilma Rousseff has long been criticized by business interests for her economic policy as growth sputtered, budget deficits ballooned and inflation and interest rates soared. But now she facing increasingly strident calls for the ouster of her finance minister from an unusual source: her own left-wing party, The Wall Street Journal reported.

In the smog-filled, run-down industrial hubs that ring the southern end of Sao Paulo, Brazil’s next big crisis is taking root, Bloomberg News reported. The labor market, long the country’s lone economic bright spot as growth stagnated, is suddenly deteriorating rapidly, driving unemployment all the way up to 7.6 percent from a record-low 4.3 percent at the end of 2014. Nowhere are the layoffs that are fueling that surge more acute than here, in this gritty complex of steel, auto and auto-parts factories built decades ago by the likes of Ford Motor Co. and Volkswagen AG.

President Dilma Rousseff of Brazil announced Friday that she was cutting her salary by 10 percent, reducing the size of her cabinet and slashing thousands of coveted jobs for political appointees in an effort to build support for broader austerity measures as she grapples with calls for her ouster, the International New York Times reported. The moves by the beleaguered leader, which reduce the number of cabinet ministries to 31 from 39 and extend the pay cut to the vice president, Michel Temer, and all of her ministers, reflect how Ms.

Insolvency on the Brazilian electric energy market has spread to critical levels, energy traders said on Tuesday, as hydroelectric generators balk at hefty bills for which the local regulator says they are on the hook, Reuters reported. After nearly two years of drought and long delays in completion of new generation projects such as large scale dams in the Amazon, Brazil's hydro generators have been unable to produce enough electricity to cover their supply contracts. And the energy market regulator Aneel said they must buy energy on the spot market to cover their commitments.

The Bill and Melinda Gates Foundation is suing Brazil’s Petróleo Brasileiro SA and its auditor in a New York court, claiming a vast corruption scheme centered on the state-run oil company caused the charitable organization to lose tens of millions of dollars, The Wall Street Journal reported. The foundation, started by the billionaire co-founder of Microsoft Corp. and his wife, joins a long list of plaintiffs seeking to recoup money they lost as the scandal hammered the value of their investments in Petrobras shares.

By backpedalling on its budget promises during the past month, the government has cost Brazil its prized investment-grade credit rating and sent its currency, the real, plummeting against the dollar as bond spreads soar, the Financial Times reported. Analysts are competing with forecasts of further weakening for the real, but some market observers wonder whether the moment has come for bargain-hunting among Brazilian assets. “I’m not calling the bottom necessarily,” says Fernando Honorato, chief economist of Bradesco Asset Management, referring to the Brazilian market.