Brazil’s economy shrank less than forecast in December, capping a year when Latin America’s largest nation entered its worst recession in decades.
The seasonally adjusted economic-activity index, a proxy for gross domestic product, decreased 0.52 percent in December from the previous month, after falling a revised 0.64 percent in November, the central bank said on Thursday. The median estimate of analysts surveyed by Bloomberg was for a decline of 0.65 percent. The index tumbled 4.08 percent in all of 2015, a number that if confirmed by official GDP data would be the worst decline since 1990.
Most economists agree that Brazil will suffer a second consecutive year of shrinking GDP in 2016, though there’s less consensus about 2017. Analysts surveyed by Bloomberg and the central bank forecast a slight recovery next year while the International Monetary Fund estimates there will be no growth at all.
The downturn has taken its toll on Brazilians, as more than a million people lost their jobs in the past year amid waning demand and tighter credit conditions. Double-digit inflation ate away at purchasing power in 2015, leading to a drop in retail sales and industrial output.
The government is betting that a program to extend loans to farmers and businesses will stimulate growth while efforts to shore up fiscal accounts will revive waning investor confidence. Yet many of the programs will depend on approval in Congress, which last year proved reluctant to cooperate with the administration.