The World Bank forecast Brazil’s recession will extend into a third consecutive year, while Venezuela takes the world’s deepest plunge in 2016. The two will drag Latin America into back-to-back economic contractions for the first time in more than three decades.
Brazil will contract 4 percent in 2016 and 0.2 percent next year, with the 2017 outlook revised from a prior forecast for a 1.4 percent expansion. Venezuela’s economy is seen shrinking 10.1 percent this year, more than double the multilateral’s prior estimate and the worst performer among all countries tracked by the World Bank.
Lower international commodity prices have torpedoed Venezuela’s economy and hampered Brazil’s recovery, weighing on Latin America’s prospects in general. Brazil is laboring to pull itself from its worst downturn in decades, with Acting President Michel Temer seeking to shore up government accounts and investor sentiment by implementing austerity measures and reforms. Venezuela’s Nicolas Maduro is clinging to power amid growing street protests and economic meltdown.