Brazil Is Poised For Its Worst Recession Since 1901, Economists Say

Brazil is in the midst of a “perfect storm” with severe factors both on the domestic front amid a political crisis, high inflation, fiscal issues, sovereign downgrades, and fleeing investment; but also from severe factors from abroad as oil and commodity prices continue to plunge, growth in China slows, and as the U.S. Federal Reserve hiked interest rates for the first time in nearly a decade and who have threatened hiking rates an additional 3 to 5 times in 2016.

That said, both economists and investors are seeing a lot of gloom on the horizon for the largest Latin American nation.

As we ring in the new year and welcome the prospects and hopes for 2016, things in Brazil do not appear to be shaping up very well, at all, and not that 2015 was a good year for the nation either.

This year, Brazil’s economy is on pace to see its deepest recession since at least 1901 as economic activity and confidence sink, according to a weekly Central Bank poll, Bloomberg reports.

According to the survey, Brazil’s economy will fall 2.95 percent in 2016, according to the Central Bank poll of around 100 economists, versus a previous estimate for a 2.81 percent fall.

Analysts have now lowered their 2016 growth forecast for a 13 straight week and are estimating that Brazil’s economy fell 3.71 percent in 2015.

Brazil is facing its fastest inflation in 12 years, and policy makers are struggling to control this without a further impact to its already weak economy.

Impeachment proceedings and a broadening corruption scandal in the nation are also hindering the approval of economic policies which could attempt to help jump-start economic growth.

In December, consumer confidence reached a record low, as measured by the Getulio Vargas Foundation.

The last time that Brazil had back-to-back years of recession was in 1930 and 1931, and the nation has never had a recession as deep as that forecasted for 2015 and 2016 combined, according to data from national economic research institute IPEA that dates back to 1901, Bloomberg reports.