Politics, Business & Culture in the Americas

Brazilian Economy Projected to Suffer Worst Contraction in 25 Years



Brazil’s economy is expected to contract by 0.83 percent this year and inflation to climb to 8.12 percent, according to the Brazilian Central Bank’s weekly survey of financial experts, which was released yesterday. The growth forecast for 2016 was also lowered from 1.3 percent last week to 1.2 percent this week. According to Bruno Rovai, an analyst at Barclays, “[…] incoming data supported our view that Brazil will face a recession this year, and that any strong recovery will be hard to achieve next year.”

Yesterday’s survey marks the 12th consecutive week of worsening forecasts on the Brazilian economy, and come at a tense time for Brazilian President Dilma Rousseff, who is dealing with an escalating corruption scandal involving the state-run oil company, Petrobras. Rousseff has also received criticism, including from traditional allies, for austerity measures that her government has introduced to manage Brazil’s deficit and inflation woes.

“We do not discard the possibility that political risks could increase in the next few weeks, given Petrobras’ audit result deadline or corruption investigations escalating further,” said Rovai. Petrobras is due to publish its audited fourth quarter results at the end of the month.

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