SAO PAULO: Brazil hoped to start 2016 making itself pretty for its turn on the world stage when its hosts the summer Olympics. Instead attention has turned to its deepening economic crisis.
The world's seventh largest economy tipped into recession last year -- official figures show that 1.5 million jobs were destroyed.
The downturn is due to last throughout this year, the International Monetary Fund says.
That would be the first two-year recession since the 1930s in Latin America's economic powerhouse.
"This year started with very bad news," said Manuel Enriquez, an economist at Sao Paulo University.
"The economic outlook for Brazil is very bad for 2016 and also for the year after."
The IMF said it expected Brazil's economy to contract 3.5 percent this year and remain stagnant in 2017. It shrank by 3.8 percent in 2015, according to the fund.
A finance scandal that sparked impeachment proceedings against leftist President Dilma Rousseff has aggravated the crisis.
"There is no confidence in the government. Businesses are mistrustful and people are afraid of losing their jobs," said Enriquez.
"The banks are afraid that loans won't be paid back. All this is creating a negative atmosphere in which there is no way to stimulate demand."
Ratings agencies Fitch and Standard & Poor's have downgraded Brazil, criticizing its failure to clean up its public finances.
Aside from the political chaos swirling around the president, state oil firm Petrobras was engulfed in a corruption scandal last year.
That and the plunging oil price battered the giant company, which has dragged down the Sao Paulo stock market.
"Petrobras shares are cheaper than a cup of coffee," said Enriquez.
Comments
Comments are closed.