A prolonged recession in Brazil fanned by political turmoil will drag on economic growth for the next two years in Latin America, a region already reeling from falling commodity prices, the International Monetary Fund said on Tuesday.
In its World Economic Outlook, the IMF revised its 2016 recession estimate for the region to 0.5 percent from 0.3 percent. It would be Latin America’s second straight year of contraction and the worst performance of any region – including the slow-recovering Euro area.
Although the IMF expects most of the region’s economies to pick up steam in 2017, growth will remain moderate given the impact of what could be Brazil’s worst recession in more than a century.
The Fund sees Latin America growing 1.5 percent in 2017.
The worsening political crisis that could oust leftist President Dilma Rousseff in the coming weeks has thrown Brazil further into chaos by slashing investment and consumer spending in what was until a few years ago an emerging success story.
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