Brazil risks a recession as presidential campaign heats up

Brazil's President Dilma Rousseff reacts during a meeting of the Council for Economic and Social Development (CDES) in BrasiliaBy Walter Brandimarte RIO DE JANEIRO (Reuters) – Brazil’s sluggish economy faces substantial risk of falling into a light recession in 2014, and may already have done so, providing opposition candidates with extra ammunition in the run-up to October’s presidential election. Latin America’s largest economy has slowed to average growth of just 2 percent a year since President Dilma Rousseff took office in early 2011 and, coincidentally, global demand for commodities ebbed. Attempts to boost activity by spurring consumption largely backfired as investment failed to catch up with demand, driving inflation higher and eventually forcing the central bank to drive up interest rates. “That would give you a technical recession,” warned Alberto Ramos, Goldman Sachs senior economist for Latin America.