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Brazil economists forecast weaker growth amid crisis

People demonstrate against Brazilian former president (2003-2011) Luiz Inacio Lula da Silva in Sao Paulo, Brazil on March 19 2016. Brazilian lawmakers relaunched impeachment proceedings against President Dilma Rousseff Thursday and a judge blocked her bid to bring her powerful predecessor into her cabinet, intensifying the political crisis engulfing her.  AFP PHOTO / NELSON ALMEIDA / AFP / NELSON ALMEIDA

Bloomberg

Brazil analysts reduced their 2016 economic growth forecast for the ninth straight week as a political crisis grips the nation and further dims the outlook for turnaround.
Economists lowered their 2016 economic forecast to a contraction of 3.6 percent, and reduced their 2017 outlook for the first time in more than a month to 0.44 percent growth, according to the weekly Focus survey conducted March 18. They also trimmed their 2016 forecast for inflation for the second straight week after the currency strengthened this month more than any other in the world.
Brazil’s President Dilma Rousseff is facing growing threat of impeachment after the lower house last week formed a commission to hear the case. Demonstrators calling for her ouster as well as those defending her mandate turned out en masse as a series of revelations from a corruption probe were spooled out one after the next. At a moment when acrimony is on the rise both within Congress and on the streets, much-needed measures to shore up government finances and confidence have found their way to the back burner.
“Improvement in the economic situation will improve the political situation, but it’s a two-way street: improvement in the political situation will also help the economic recovery,” Finance Minister Nelson Barbosa said on March 18. “Today the political uncertainty delays the economic recovery.”
Brazil’s consumer and investor confidence levels have rebounded as of late, yet remain near historic lows. The market placed greater odds of regime change, driving up prices of Brazilian stocks and the currency. The real has gained 10.8 percent this month.

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