By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – Although the latest economic data released in Brazil this week showed some easing of the economic turmoil faced by the country, a report by the Organization for Economic Co-Operation and Development (OECD) revealed that the country’s recession should extend into 2017.
The report released by the OECD released on Wednesday states that the country is likely to dive deeper into recession this year before starting to recover next year. Forecasts from the entity calls for a retraction of the country’s GDP growth this year to reach 4.3 percent, and -1.7 percent in 2017. Brazil’s IBGE (Statistics Bureau) is forecasting a GDP growth retraction of 3.8 percent this year.
The organization says that the high political uncertainties and the continuous disclosures of corruption are ‘hindering consumer and business confidence’. For the OECD with the retraction of the economy, unemployment in Brazil is expected to increase even further during the year.
The OECD report comes as some analysts have begun to speak cautiously optimistically about the country’s economy. On Wednesday the IBGE released the first quarter GDP figures for 2016, and although still showing a retraction of 0.3 percent, was better-than-expected by market analysts. According to analysts, the latest data signals some stabilization and the possibility that Brazil’s economy could have ‘bottomed out’.
Adding to the better-than-expected GDP data, Brazilian industrial production rose for the second consecutive month in April, increasing by 0.1 percent from the previous month. The forecast by the majority of financial analysts for the index was of a decline of 0.9 percent in relation to March.
The two sectors responsible in helping the index remain in positive territory in April were food production, with an increase of 4.6 percent and production of oil and biofuels, up by four percent.