Roundup: Brazil's economy indicates bleak outlook

Brazil's economy is expected to be depressed, as experts have forecasted a 3.7-percent contraction in its gross domestic product (GDP) for 2015 and a sluggish prospect in 2016, the Central Bank of Brazil said Monday.

The bank's weekly survey by financial analysts showed the outlook for 2016 to be somewhat better, but still dismal, with GDP expected to shrink 2.81 percent.

It is the first time since 1947 that Latin America's largest economy, and the world's eighth-largest, has been estimated to shrink two years in a row.

NEGATIVE ECONOMIC INDICATORS

Brazil's economy is going through a severe recession that is expected to continue through the next year, and winter season's sales proved that Brazilians are keenly aware of the economic downturn, as Christmas sales dipped 6.4 percent compared with 2014, the lowest level since 2003.

The drop in sales derives from inflation, unemployment and costlier credit, according to a consumer report issued by consulting firm Serasa Experian on Monday.

Other economic indicators fared no better, as inflation is expected to stand at 10.72 percent in 2015, the highest since 2002, though it is forecasted to drop to 6.86 percent next year.

Brazil's currency, the real, is expected to close at 3.9 to the U.S. dollar this year, and will continue to depreciate in 2016.

In terms of trade balance, however, market analysts expect it to increase, reaching 15 billion U.S. dollars in 2015, and 33 billion next year.

Foreign direct investment should hit 63 billion U.S. dollars in 2015, but will decrease to 55 billion in 2016, according to the bank survey.

On Monday, the National Treasury reported a primary deficit in November of 21.278 million reals (5.319 million U.S. dollars), the worst monthly result since 1997.

From January to November, the accumulated primary deficit reached 54.33 million reals (13.582 million U.S. dollars), marking another negative record for the period.

Interim Treasury Chief Otavio Ladeira blamed the poor figures on a drop in revenues, mainly due to falling oil prices.

NEW FINANCE CHIEF MEETS FIRST HURDLE

Brazil's new Finance Minister Nelson Barbosa has suffered a major setback since taking office just 10 days ago, as his proposal to raise the minimum retirement age, along with other measures to trim the public deficit, has received disapproval from the labor force.

According to a poll commissioned by the country's largest labor union, the Unified Workers' Central (CUT), 88 percent of those interviewed said "no" to his proposals.

The proposals are expected to be submitted to the Congress when it convenes again in February.

CUT President Vagner Freitas said the survey was the first ever by a Brazilian labor union to see what workers think of proposed public policies.

"We need a tool like this to know if our proposals meet with approval and to outline strategies to defend the rights of the working class," said Freitas.

Barbosa's predecessor, Joaquim Levy, was forced out of his post for failing to effectively improve public accounts.

A majority of workers support the CUT's proposals to get the economy back on track, he said, such as offering companies incentives to maintain employment levels and raising corporate income tax. Endi