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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Although Brazil’s economy will still register a contraction this year, the decline will be lower than expected, according to risk agency Fitch. Its Global Economic Scenario report released on Wednesday estimates that the country’s economic contraction would total 3.3 percent in 2016, instead of the 3.8 percent estimated in March.

Despite forecasts of improvement in Brazil's economy, construction is one of the sectors most affected by unemployment in Brazil, photo by Marcelo Camargo/Agencia Brasil.
Despite forecasts of improvement in Brazil’s economy, construction is one of the sectors most affected by unemployment in Brazil, photo by Marcelo Camargo/Agencia Brasil.

The report with forecasts for the global economy for the next few months estimates that with the stabilization of commodities prices the economies of emerging nations such as Brazil will improve.

“The stabilization of global commodities prices is decreasing the pressure over (commodities) producing countries,” says the report, adding that in the case of Brazil, the country’s economy has started to be helped by the recovery of exports, which compensated in part the weak domestic demand.

Fitch, which in December of 2015 downgraded the country’s sovereign rating leading to the loss of Brazil’s investment grade acknowledged that the Brazilian GDP for the first quarter of this year should be better than forecast and that the country’s economy will start to stabilize before the end of the year.

Yet while the international agency forecasts an improvement in the months ahead, the number of job closings continues high. According to the Labor Ministry’s General Employment and Unemployment Registry (Caged) more than ninety one thousand job positions were closed in June, with more Brazilians being laid off than hired during the month.

The hardest hit sector has been the services sector, with over 42,000 jobs closed last month, followed by the transformation industry and construction sector. According to Caged the only sectors to register job openings were agriculture and public administration.

The states registering the largest numbers of job position closings are São Paulo and Rio de Janeiro.

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