2016 was supposed to be a triumphant year for Brazil. After all, it will be hosting South America’s first ever Olympic Games in Rio in 2016. This was supposed to mark its coming of age as a rising world power and the Latin American connection in the much-vaunted BRICS group of rising economies. Yet what it really faces is the deepest recession since the 1930s, a slump so deep that some Brazilians have started referring to it as a depression. How did it fall so far so fast?

As recently as 2009, Brazil was on top of the world. Its beloved president Luíz Inácio Lula da Silva, popularly known as Lula, had won the right to host the 2014 World Cup and the 2016 Olympic Games. Petrobras, the state-run oil company, had found truly enormous oil reserves deep beneath the salt crust on the floor of the Atlantic Ocean. Lula had promised that these were Brazil’s “passport to the future”. A famous cover on The Economist magazine showed the famous Jesus statue above Rio as a rocket shooting up into the sky.

A country that had been known as late as the 1990s for chaotic finances and a near-worthless currency was now in such a strong position (or so it seemed) that it donated $10 billion to the IMF to help bailout countries in an economic crisis. A year after the GFC in America, the country was still growing at 7.5%, giving the impression that it was now strong enough to resist economic downturns elsewhere. Yet Brazilian confidence was hugely misplaced. The country was about to enter into a slowdown that turned into a gigantic bust.

THE WORST OF TIMES IN BRAZIL

Any data from Brazil in recent times has been sobering. After briefly becoming the fifth biggest economy in the world based on purchasing power, the country has now slid back to ninth place, and it is expected to contract a further 2.5% in 2016. The Brazilian real, the national currency, has lost 60% of its value since 2011 and its decline may not be over yet. It was introduced at near parity with the US dollar, but $1 now fetches 4.08 real.

Petrobras, despite its enormous oil reserves, has lost 70% of its value since 2007. It is currently embroiled in one of the biggest corruption scandals in history. It appears it was looted for billions of dollars by corrupt politicians. Dozens of parliamentarians have been exposed, prompting street protests of up to 1 million people. President Dilma Rouseff enjoys popularity ratings of around 10%, the lowest ever figure since Brazil returned to democracy from military rule.

The economy shrank 3.7% in 2015, making it the worst year for the economy since the 1930s. So important is Brazil to the economy of South America that the entire continent is being dragged down with it. South America’s entire GDP shrank 1.1% in 2015, so a year-long recession has already afflicted the continent- a fact that has barely even been reported on by mainstream media outlets. They are so obsessed by the cult of celebrity around Donald Trump that they are never bothered by something so trivial as a continent-wide recession. But I digress.

Reform is drastically needed but Brazil is instead focusing its attention on impeachment proceedings against Rousseff instead. However incompetent her stewardship of the economy has been, the problem appears to be a massively venal political class rather one politician. By the end of this year, Brazil’s economy may be 6% smaller than it was at the start of 2014, indicating a near Depression in the country. The stratospheric hubris of the BRICS era is now surely dead. The figure below should reinforce this point clearly enough.