Much of the slowdown can be pinned on a political crisis that has stalled the passage of economic reform proposals in Congress. President Dilma Rousseff has grown increasingly unpopular, with approval ratings of about 10% in recent polls, making it harder for her to convince lawmakers to support austerity measures.
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Cunha said he officially accepted an impeachment petition, which was filed by opposition figures on the grounds that Rousseff manipulated the budget to fill budget holes.
Rousseff has said she is confident she will survive the assault and her allies told O Globo newspaper that they have enough votes to block an impeachment vote.
While that panel is expected to advance the matter to the full House, analysts said it was unlikely impeachment would get the two-thirds vote needed to remove Rousseff from office temporarily. That could lead to his ouster well before a presidential impeachment process can be concluded.
The charges against Rousseff deal primarily with alleged manipulation of state funds to hide a mounting fiscal deficit as well as illicit funding for her election campaign.
The impeachment effort comes as Brazil’s economy is expected to contract more than 3.5 percent this year and again be in recession next year.
After a week in which the nation’s top young financier was thrown in jail alongside a senator – pushing his bank into a struggle for survival – and Goldman Sachs Group Inc warned the economy was slipping into a full-blown depression, impeachment proceedings were initiated late Wednesday against President Dilma Rousseff.
Lower house speaker Eduardo Cunha finally said he had agreed to open proceedings.
But Brazil’s federal audit court in October ruled that Rousseff broke the nation’s fiscal responsibility law in 2014 by using money from state-run banks to fill budget gaps and pay for government social spending. About a year ago, investigators found proof of a massive bribery scandal between contractors and Petrobras officials, which included major government leaders.
Cunhas has been at odds with the president since he was voted speaker in February, even though his political group, the Party of the Brazilian Democratic Movement, is the principal ally of Rousseff’s Workers’ Party in the governing coalition.
Carlos Pereira, of the Getúlio Vargas Foundation think tank, said Cunha had been under huge pressure from the opposition to begin impeachment proceedings, but was now a “dead speaker walking” after waiting too long to make his move.
Rousseff herself faces no accusations of wrongdoing in the corruption scandal.
However, she has repeatedly said she will fight impeachment, which she calls a “coup plot”. “Everyone in Brazil must obey the law, particularly the President”, he wrote.
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London-listed iShares MSCI Brazil gained 4 percent to 1247.5 pounds, the highest since last Friday.
