Brazil enters recession

 As part of my goal of understanding what's happening in the global economy, I've added a deeper analysis of the smaller members of the "Big 8"  (USA, Euro zone, China, Russia, Japan, UK, India and Brazil).  I've already reported on the Russian economy.  Now it's Brazil's turn.

The chart below shows my diffusion index for Brazil compared with Brazil GDP.  As GDP is monthly, it's available more quickly than GDP data.  A diffusion index measures the percentage of monitored time series which are falling or rising.  At 50%, half the series are rising, half falling, and that normally coincides with a cyclical turning point.  A diffusion index tends to lead the cycle, since it has to turn down from its peak before it reaches the 50% recession line, and turn up from the trough before it reaches 50% from below.  My Brazil diffusion index leads by a couple of months at the trough (though sometimes it's longer) and by a couple of quarters at the top (though sometimes it's less).  A diffusion index isn't perfect, because it also picks up small and shallow cycles, which have much less economic significance.  Still, at the moment, only about 30% of time series including in the diffusion index analysis are going up.

This is still a WIP (work in progress)---I don't yet have as much data as I'd like.  But I'm working on it.  I'm also creating a coinciding index and (maybe!) a leading index.  I'll keep you posted.