Economy shrinks 4.3% in 2016, says Central Bank

TV Jurerê
08:29:AM - 21/Feb/2017
Economy shrinks 4.3% in 2016, says Central Bank

21/02/2017 | 8:29AM

Known as a GDP forecast, the Central Bank's Economic Activity Index (IBC-Br) fell by 4.34% in 2016, indicating the second consecutive year of recession in the country. The result, announced on Thursday (16), was worse than expected by the financial market - projected drop of 3.5%. If the percentage is confirmed by the IBGE, which publishes the Gross Domestic Product (GDP) on March 7, the activity decline may be the highest in the last 26 years - in 1990, it fell 4.35%.

The scenario for 2017, however, is a little more encouraging, after a year marked by turmoil in the political area, which helped to worsen the economic crisis. Recovery, stability, stagnation - experts may not reach a consensus on the word that best sets the expectation for 2017, but agree that the GDP may eventually come out of the red with inflation at the center of the target of 4.5%. But the unemployment rate, which hits a record high and reaches 12 million people, should take a little longer to pull back.

According to Carlos Alberto Ramos, professor of economics at the University of Brasilia, the data indicate that the cycle of recession is coming to an end and that "the worst has passed": "Now there is a period of stagnation, but 2017 will hardly close with negative numbers." Despite the instability in the political scenario, Ramos evaluates that macroeconomic measures adopted by the federal government, such as a reduction of the Selic rate, can help in the recovery process. If approved, pension and labor reforms are also seen as positive signs for the market.