Brazil heads for worst recession since 1901, economists forecast
RIO DE JANEIRO – Brazil’s economy will contract more than previously forecast and is heading for the deepest recession since at least 1901 as economic activity and confidence sink amid a political crisis, a survey of analysts showed.
Latin America’s largest economy will shrink 2.95 percent this year, according to the weekly central bank poll of about 100 economists, versus a prior estimate of a 2.81 percent contraction. Analysts lowered their 2016 growth forecast for 13 straight weeks and estimate the economy contracted 3.71 percent last year.
Brazil’s policy makers are struggling to control the fastest inflation in 12 years without further hamstringing a weak economy. Finance Minister Nelson Barbosa, who took the job in December, has faced renewed pressure to moderate austerity proposals aimed at bolstering public accounts and avoiding further credit downgrades. Impeachment proceedings and an expanding corruption scandal have also been hindering approval of economic policies in Congress.
“We’re now taking into account a very depressed scenario,” Flavio Serrano, senior economist at Haitong in São Paulo, said by phone.
Central bank director Altamir Lopes said on Dec. 23 the institution will adopt necessary policies to bring inflation to its 4.5 percent target in 2017. Less than a week later, the head of President Dilma Rousseff’s Workers’ Party, Rui Falcão, said Brazil should refrain from cutting investments and consider raising its inflation target to avoid higher borrowing costs.
Consumer confidence as measured by the Getulio Vargas Foundation in December reached a record low. Business confidence as measured by the National Industry Confederation fell throughout most of last year, rebounding slightly from a record low in October.
The last time Brazil had back-to-back years of recession was 1930 and 1931, and has never had one as deep as that forecast for 2015 and 2016 combined, according to data from national economic research institute IPEA that dates back to 1901.
© 2016, Bloomberg News
You may be interested
Latin American leaders repressed protests in 2019, according to AIAFP and The Tico Times - February 27, 2020
Millions of people turned to the streets of Ecuador, Chile, Bolivia, Colombia, Brazil, Venezuela, Ecuador, Puerto Rico and Honduras in…
Costa Rica says it’s the first country in the region with nationwide electric vehicle charging gridAlejandro Zúñiga - February 27, 2020
Costa Rica has more than 100 electric car charging stations within its national territory, according to First Lady Claudia Dobles,…
Both Costa Rican clubs eliminated from CONCACAF Champions LeagueAFP and The Tico Times - February 27, 2020
Costa Rica's two representatives in the CONCACAF Champions League, Deportivo Saprissa and AD San Carlos, were both eliminated from the…