Brazil's worst-ever recession likely extended into fourth quarter

Shoppers walk in a mall in Refice, northeast Brazil, May 5, 2010. REUTERS/Bruno Domingos

BRASILIA (Reuters) - Brazil’s economy probably contracted for an eighth straight quarter at the end of 2016, offering further proof that Latin America’s largest economy has been in its worst recession ever, a Reuters poll showed on Friday.

Gross domestic product probably shrank 0.4 percent in the fourth quarter from the third after seasonal adjustments, according to the median forecast of 16 economists. Brazil’s GDP contracted 0.8 percent in the third quarter.

Brazil’s economy is expected to have contracted 3.5 percent in 2016, after a decline of 3.8 percent in 2015. Brazil has never experienced such a long and deep period of recession, at least since records began more than a century ago.

The recession has left nearly 13 million people unemployed and caused a record number of bankruptcy filings. It also contributed to the ousting of former President Dilma Rousseff last year and to the low approval ratings of her successor, President Michel Temer.

The fourth-quarter GDP numbers will be released on March 7.

Leading indicators have suggested the economy is finally emerging out of recession in the first quarter of 2017, Finance Minister Henrique Meirelles told Reuters earlier this week. The central bank has been cutting interest rates at a rapid pace as inflation falls, which is expected to help boost growth.

The recovery, however, is expected to be very slow. The median expectation of economists in a weekly central bank survey projected a GDP expansion of 0.5 percent in 2017.

Although this recession has been the deepest in Brazil’s history, it has not been as dramatic as other crises in the country’s turbulent economic past. Previous downturns were often marked by debt crises, capital flights, hyperinflation and mass migration, none of which happened during the current recession.

Brazil’s economy probably shrank 2.2 percent in the fourth quarter from a year before, according to the poll.

Reporting by Silvio Cascione; Editing by Matthew Lewis