The Brazilian GDP, the largest economy in Latin America, fell by 0.6 percent in the second quarter ending in June, worse than analysts had predicted. In the first quarter revised figures showed a fall in GDP of 0.2 percent, according to data from the IBGE (Brazilian Institute of Geography and Statistics).

A recession is defined as two consecutive quarters of contraction, which classifies Brazil as in a technical recession. However Guido Mantega, Brazil’s finance minister, denies a recession citing the drop in car exports to Argentina as one of the reasons for the setback in Brazil’s growth.

He said the fall in Brazilian GDP was small and does not affect the country’s performance or consumption, and goes on to predict an improvement in the next semester. He added that he does not see the economic downturn as a recession as unemployment is not rising.

Others are not so optimistic. “This recession shows the exhaustion of a growth model that has been centered on internal consumption,” says Eduardo Velho, chief economist at investment firm INVX Global in São Paulo.

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