Brazilian Crisis: Great Recession (2015–2016)

In this study, the causes and the consequences of the unprecedented great recessionGreat recession experienced by BrazilBrazil crisis were examined in the light of macroeconomic indicators which is the largest economy in Latin America and the eighth largest in the world. The combination of both internal and external economic and political reasons made the Great RecessionGreat recession inevitable. So that; Rousseff’s first term (2011–2014) she continued the anti-cyclical economic policies implemented by her predecessor Lula administration without slowing down, considering both demand and supply-side growth by offering tax exemptions, subsidies, low interest rates and social public expenditures within the scope of the new economic matrix planNew economic matrix plan. However, the transfer of the incentives offered to the companies that did not invest, the strong unionization and the increase in labor demand under the existence of a strict labor market, the bargaining power of the workers and the decrease in the profit rate expectations of the enterprises combined and the expected investments did not materialize. The increasing inflation pressure due to the existence of an unstable and constantly deficit budget, the lack of production that cannot meet the domestic demand and employment pushed Rousseff to implement austerity policies in her second term (2015–2016). In the same period, the arrests of the executives of Petrobras, the largest public oil company in Brazil, senior ministers and politicians for bribery and corruptionCorruption by rigging public tenders, the dismissal of President Rousseff, who turned a blind eye to the corruptionCorruption process and manipulated the figures to show the budget deficits low, considered to be one of the internal causes of the recessionRecession. Again in the same period, the astronomical fall in commodity prices, which account for 30% of Brazilian exports, and the decrease in Chinese demand are among the external causes of the great recessionGreat recession. When the results of the crisisBrazil crisis are examined in the light of macroeconomic indicators, the Brazilian economy shrank by −3.54 and −3.24% in 2015 and 2016 for the first time in its 40-year economic historyEconomic history, and in terms of unemployment rates, Brazil experienced an increase in the first year of the recession 19% (from 7.8 to 9.3%) and 40% (from 9.3 to 13%) in its second year.