Brazil's economy to shrink 3.5% this year, IMF forecasts

The International Monetary Fund has revised down the outlook for Brazil's economy this year, forecasting a 3.5% decline in Gross Domestic Product (GDP), as against a previous 1%. According to the IMF, the economy will shrink for the second consecutive year. In 2015, the Brazilian economy was down 3.8%.

For 2017, the IMF expects stability with zero GDP growth. This forecast is a deterioration of the previous 2.3% growth outlook in October last year.

Brazil's poor economic performance has had a negative influence on the figures for Latin America, with region's economies expected to shrink 0.3% this year. But an upturn should come in 2017 with the region growing 1.6%.

In its World Economic Outlook report, the IMF says Brazil's recession has been caused by political uncertainties, with ongoing developments from a massive corruption scandal and Petrobras state-run oil company at the center of an investigation whose damage has turned out to be deeper and last longer than expected.

According to the IMF, the global economy should grow 3.4% this year and 3.6% next year.

Translated by Mayra Borges