Brazil’s economy should end 2016 with a fall of 3.5% of GDP, predicts the International Monetary Fund (IMF), the revised forecasts announced on Tuesday.
In the year past, the country recorded a setback of 3.8%. In 2017, can build a stable result, with zero growth, according to the IMF.
Since the Latin American and Caribbean economy will close 2016 with a setback of 0.3%, dragged by the poor performance of Brazil, according to the forecasts of the Fund.
The forecast for Latin America and the Caribbean is a review sharply lower to -1.1 percentage point in comparison with the projections of the IMF October when the background indicated a recovery of 0.8%. For 2017, the IMF expects the region to growth of 1.6%.
In reviewing the figures from the IMF World Outlook released in October, Brazil had the most significant revision in decline among emerging economies and Latin America, with a low of no less than 2.5 percentage points.
In October, the IMF had considered that Brazil would end 2016 with a decrease of 1%, but the fundamentals have worsened and financial institution presented the drastic downward revision.
By analyzing the Brazilian case, the IMF stressed that the recession “caused by political uncertainty amid the consequences” of investigations into allegations of corruption at Petrobras, “is proving to be deeper and longer than expected “.
The chief economist of the IMF, Maurice Obstfeldt, said it was positive that the result of this was the appreciation of the” need for Brazil to improve governance ” .
Corruption and political problems, Obstfeld said, “undermine confidence, as well as the continuing deterioration of the budgetary outlook, which is undermining confidence and leading to higher depreciation (real), higher inflation”.
The specific weight of Brazil in the scenario helps to bring down growth expectations throughout the region, according to the IMF.
“The current projection shows that the aggregate GDP of Latin America and the Caribbean will also record contraction in 2016, but with a lower rate than in 2015, despite the positive growth in most countries in the region. This reflects the recession in Brazil and other countries in economic difficulties, “says the IMF.
In the report, the Fund provides for a” gradual improvement “in the growth rates of the countries that” are going through economic tensions “and He cites the cases of Brazil, Russia and some Middle Eastern states.
At the same time, however, indicates that “even this projected partial recovery could be thwarted by new economic shocks or politicians.”
The Latin American economies commodity export profile may also suffer the impact of the slowdown in China, which closed 2016 with growth of 6.9%, the lowest level in 25 years.
According to the IMF, “deceleration and the gradual rebalancing” of China’s economy, the second largest in the world, is one of the “critical transitions” in the current scenario.
The sudden reduction of imports and exports also imposes more pressure on a worldwide commodity market already depressed, and this directly affects the exporting of many countries, particularly Australia and Brazil.
Brazil, leading economy in Latin America, five fight years against an economic slowdown that has turned into crisis in 2015.
The country entered into recession in the second quarter of last year, which reduced their saving capacity and led the government to reduce in five times the goal budget, which went from a surplus of 1.2% of GDP to a deficit of up to 2%, or almost $ 31 billion.
Brazil’s inflation reached in 2015 the 10 index 67%, the highest level since 2002, well above the 4.5% government target. In 2014, the country ended the year with inflation of 6.41%.
The country also suffers the effects of the many revelations of a huge corruption scandal affecting Petrobras, a situation that caused a deep political crisis .
In this scenario, President Dilma Rousseff faces the threat of an impeachment process stimulated by the opposition.
In a recent meeting with reporters, Dilma Rousseff said the biggest mistake made by his government was not realizing the extent of the crisis.
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