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Montevideo, December 3rd 2016 - 04:36 UTC

Confirmed: Brazil faces its worst economic plunge in 25 years

Tuesday, January 5th 2016 - 08:34 UTC
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GDP and inflation forecasts come from Boletin Focus, a Central Bank survey of analysts from about 100 private financial institutions on the state of the economy GDP and inflation forecasts come from Boletin Focus, a Central Bank survey of analysts from about 100 private financial institutions on the state of the economy
Brazil, in a technical recession, has had its sovereign debt lowered to junk status by Standard & Poor's and Fitch Ratings in recent months. Brazil, in a technical recession, has had its sovereign debt lowered to junk status by Standard & Poor's and Fitch Ratings in recent months.

Analysts expect Brazil's economy to contract by 2.95% this year after contracting by 3.71% in 2015, marking the biggest drop in economic output in 25 years, the Central Bank said on Monday. The first survey of analysts released this year shows that private sector economists expect the inflation rate to hit 6.87% in 2016.

 Last week, analysts said they expected Brazil's economy to contract by 2.81% in 2016, with inflation reaching 6.86%.

The gross domestic product (GDP) and inflation forecasts come from the Boletin Focus, a weekly Central Bank survey of analysts from about 100 private financial institutions on the state of the national economy. The government started using the survey in preparing its own forecasts last year.

Brazil, in a technical recession with GDP contracting for three consecutive quarters, has had its sovereign debt lowered to junk status by Standard & Poor's and Fitch Ratings in recent months.

Those downgrades have occurred even though analysts note that Brazil's foreign currency reserves are far in excess of its international liabilities.

Latin America's largest economy growth has been hampered by spending cuts implemented by President Dilma Rousseff's administration to reduce the budget deficit and control inflation.

Joaquim Levy resigned as Brazil's finance minister on Dec. 18 amid the struggling economy and a push by some in Congress to impeach Rousseff. His replacement - Nelson Barbosa, who had been heading up the Planning Ministry - was critical of some of the austerity measures implemented by his predecessor.

Categories: Economy, Brazil.

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  • ChrisR

    It is of no use stating what any economic parameter will be in the future due to DumbAss Dilma appointing the present 'Finance Minister' who is old school anti-austerity.

    She has proven that her powers as president are weakening by not supporting Levy who did his best under the most difficult circumstances to plug the waste of money.

    Basically, Brazil is fucked while this bunch of crooks are in power.

    Jan 05th, 2016 - 11:10 am 0
  • Jack Bauer

    “ Last week, analysts said they expected Brazil's economy to contract by 2.81% in 2016, with inflation reaching 6.86%.”...

    They sound optimistic.....but let the year start - after Carnival, of course - and we will soon see this optimism transform into the stark reality that confidence will not be regained so soon, or so easily.

    Jan 05th, 2016 - 09:51 pm 0
  • Terence Hill

    Economy catches Canada flat-footed, even though it was under the stewardship of a conservative government for ten years. But there isn't much point in playing Monday morning quarterback. “A decade ago, Canada set out to become an energy superpower. Now, it enters 2016 riding down one of the world’s most battered petro-currencies...In the 45 years since Canada ended its currency peg to its largest trading partner…no dollar depreciation has been this bad for this long
    Canada, the envy of the world for weathering the 2008-09 global financial crisis better than almost any other developed country, has suddenly lost it's footing in the global economy. The high oil prices and increased oilsands production that fuelled growth for a decade look unlikely to return soon,…”
    http://business.financialpost.com/news/economy/canada-in-the-middle-of-an-identity-crisis-as-loonies-worst-rout-ever-raises-petro-state-fe

    Jan 06th, 2016 - 10:52 pm 0
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