Brazilian Economy in 2015 likely to see worst contraction since 1990

The Brazilian economy in 2015 is likely to see the worst contraction since 1990. With the consumption outlook deteriorating fast due to the weakening labour market, tightening social security spending and higher inflation - as well as investor confidence remaining low amid a challenging external sector environment. 

Societe Generale estimates, the Brazil economy is likely to grow at -1.6% and 0.7% in 2015 and 2016 respectively. The surge in real exports growth on the back of BRL depreciation and the resulting gains in net exports are likely to be the only positive factors contributing to growth in 2015, added SocGen. 

"At this stage the improvement in net exports would help increase investment momentum, particularly when other segments of demand remain so weak. Given the apparent lack of any convincing external trigger, there is little possibility of the economy growing to its potential in the medium term", according to Societe Generale.