OECD Sees Brazil 2016 Recession Deepening to 4% Drop

David Biller – Bloomberg, 02/18/2016

The OECD more than doubled its forecast for Brazil’s 2016 recession, projecting it will be even worse than last year. That makes it more bearish than the International Monetary Fund and most analysts surveyed by Bloomberg.

Brazil’s economy will contract 4 percent this year after a 3.8 percent recession in 2015, the Organization for Economic Cooperation and Development said Thursday in a report. The 2016 forecast was revised down from a prior 1.2 percent decline, and is worse than estimates of all but two of 35 analysts surveyed by Bloomberg. Their median forecast is for a 2.8 percent drop this year after a 3.7 percent decline last year.

Latin America’s largest economy is sinking as demand withers. Consumers who for most of the past decade have been Brazil’s growth engine have had their confidence shot by rising joblessness and double-digit inflation. At the same time, investment has been rattled by the nation’s largest-ever corruption scandal, and the government is struggling to implement a fiscal adjustment to shore up its finances.

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