Brazil's economy reels from Chinese recession

Fuel Fix:

According to a recent Gallup survey, the most positive people in the world are in Latin America. But given recent events in global financial markets, I suspect this upbeat attitude is being severely tested. While Venezuela teeters on the precipice of social unrest amid a persistent shortage of basic goods, the Brazilian economy is giving it a good run for its money in a race to the bottom.

The fortunes of both economies are closely linked to commodities. While Venezuela’s economy is inextricably tied to oil, with 95% of its exports and 50% of its economy reliant upon it, Brazil’s economy is dependent upon a number of different commodities, from iron ore to soybeans.

Even though this seeming diversification across commodities should hold the country in good stead, the opposite has happened, given China is Brazil’s largest export market; China accounts for half of all commodities that the South American nation sends around the world.

So while Brazil has been best positioned to benefit from rising demand from China in the last decade, it is now feeling the most pain as that demand wanes. To put this rampant rise in context, Brazil’s annual trade with China was only $2 billion in 2000….but $83 billion in 2013.

A perfect storm has hit Brazil as China’s economy has weakened; falling commodity prices have given way to its currency weakening to a 12-year low, all the while the Bovespa stock index has tumbled and its government debt has risen:
...

Brazil's state owned oil company has also been under fire for corruption.   Being too dependent on China as a market is not looking like a good bargain at this point.  Venezuela has a deadly combination of incompetence and corruption mixed with socialism, a failed ideology.  The Brazilians have also dabbled in it.  Brazil is suffering from a shrinking economy, inflation and high interest rates.