Brazil's recession could be longest ever

The recession that Brazil has been in since the second quarter of 2014 may become the longest the country has ever known, reported Valor Econômico.

According to the economics institute of the Getulio Vargas Foundation (Ibre-FGV), the crisis is expected to last at least 11 quarters. If it extends beyond that, which the institute considers likely, it will be the longest recession of the last nine studied by FGV's data cycle committee (Codace).

In the last edition of Ibre-FGV's Macro Bulletin for the year, the document's technical coordinator, Silvia Matos, said GDP will shrink at least 8.1% between 2014 and 2016. The drop is similar to that recorded during the two long recessions of the 1980s and '90s, according to FGV, when GDP contracted 8.5% between 1981 and 1983, and 7.7% from 1989 to 1992. Matos estimates the current downturn will see the economy return to the same size it was at the beginning of 2011.

Ibre-FGV expects the recession to come to an end in the fourth quarter of 2016. Silva, on the other hand, cited two factors that could prolong the crisis to the following year: high inflation in 2016 (forecast at 7.5%), and the labor market deterioration lasting into 2017.