Brazil unemployment rises amid slump

GMT 19:02 2015 Tuesday ,28 April

Arab Today, arab today Brazil unemployment rises amid slump

People, most of them unemployed
Brasilia - AFP

Unemployment in Brazil rose in March for a third consecutive month to 6.2 percent from 5.9 percent in February, amid a deepening slump in South America's largest economy.

The Brazilian Institute of Geography and Statistics said the unemployment rate had increased 1.2 percent from the same month last year.

"Unemployment is going up. It was artificially low. The government gave subsidies to the automotive sector so there wouldn't be layoffs. Now reality is sinking in," Nova Futura brokerage house director Andre Ferreira told AFP.

He added that laying off workers was costly but with zero growth, "there comes a moment when you have to make adjustments."

The number of unemployed stands at 1.5 million people, 280,000 more than a year ago, out of an active workforce of 22.8 million.

Brazil had closed 2014 with 4.8 percent unemployment, its lowest level since 2002, when the South American giant entered a period of rapid growth.

High levels of unemployment had persisted even though the economy has cooled over the past five years -- a paradox that academics and analysts attributed to an ageing workforce and an increase in retirements.

Economic stagnation, meanwhile, has led to trade and current account deficits, accompanied by intensifying inflationary pressures.

Most analysts expect the Central Bank to raise the inter-bank interest rate by half a point to 13.25 percent on Wednesday.

The International Monetary Fund this month forecast that the economy will contract by one percent this year, in line with analysts' expectations.

The world's seventh largest economy has been hit by falling commodities prices, a crisis of confidence in the private sector, high costs and shortages in the areas of energy and water.

The government of President Dilma Rousseff, meanwhile, faces an unfolding corruption scandal at state oil giant Petrobras that has exposed allegations of bribes and political payoffs on a massive scale.

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