Brazil's recession worst in country's history: GDP figures

RIO DE JANEIRO: Brazil's recession hit the two year mark, becoming the worst in the country's history, after Latin America's biggest economy registered an eighth consecutive quarter of shrinkage, GDP figures showed Tuesday.

The government statistics office said the economy shrank 0.9 percent in the last three months of 2016. That meant an overall dip of 3.6 percent in 2016, following a 3.8 percent fall in 2015.

This is the deepest decline since records began.

Brazil used to be an emerging markets poster child under president Luiz Inacio Lula da Silva between 2003 and 2010, riding booming commodity prices and Chinese demand.

It also won praise for far-reaching social policies aimed at lifting tens of millions of people from extreme poverty.

But Brazil was unprepared for a slump in prices for its oil, soy, metals and other commodity exports, as well as political instability and a huge corruption scandal.

Unemployment recently reached a record 12.6 percent, amounting to around 13 million people out of work.

The country's political leadership has been in crisis since last year when president Dilma Rousseff was impeached for illegally manipulating government accounts, while several high ranking allies of her successor President Michel Temer are now mired in a sprawling graft probe.

The embezzlement and bribery scandal -- which is due to pick up pace soon with the expected release of damaging testimony against senior political figures -- is slowing down Temer's attempt to pass economic reforms in Congress.

Last August, Rio de Janeiro hosted the Olympic Games but the feelgood factor quickly evaporated in the midst of the Rousseff impeachment and nosediving economic output. The slump in GDP between the third and fourth quarter of 0.9 percent was even grimmer when compared to the final quarter of 2015: a decline of 2.5 percent year on year.

The latest quarterly declines were led by the agricultural sector, which saw a 6.6 percent fall, 3.8 percent in the industrial sector, and 2.7 percent in services, the statistics office said.

Despite the gloomy picture, market analysts and the government expect better news, predicting the economy will finally exit the recession this year, albeit ending 2017 with the most tepid of growth rates -- 0.49 percent.