Brazil’s worst recession deepens in the last quarter of 2016

Economy - Mohit Shah - Mar 08,2017

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brazil worst recession deepens in the last quarter of 2016

Brazil has been struggling with recession scares since the last two years with a further contraction of the economy by 3.6% in 2016.

As per data revealed on Tuesday, the worst-ever recession surrounding Brazil aggravated in the final quarter of 2016.

According to statistics agency IBGE, the gross domestic product of the South American nation contracted by 3.6 percent last year. These figures were followed by a 3.8 percent drop which was recorded in 2015.

Brazil has been deeply hit by the fall in commodity prices with a further distress due to the internal political crisis. The most negative effect of this dark recession can be seen on the count of unemployed people in the country.

Presently, the number of unemployed has risen by 76% to 12.9 million, a rate of 12.6% due to the continuous two-year slump.

The major economic destruction occurred in the last quarter of 2016. The economy shrunk steeper-than-expected with a rate of 0.9 percent, following a 0.7 percent dip in the previous three months.

In 2016, investment also tumbled by 10.2 percent in 2016, tagged as a sharp drop caused due to Brazil's chronically high-interest rates, as targeted by economists.

In response, the central bank decided to cut its benchmark rate from 14.25 percent in October and is expected to trim it to single digits in the present year.

However, as per recent data, there are signs that the state of a recession might end soon.

Prices in the economy are stabilizing as per Brazil's monthly inflation rates. Moreover, it is also spotted that interest rates are reducing at a faster pace defying expectations. These factors might fuel consumption and investment, which would add up to the process of the nation’s recovery.