Brazil's GDP projected to contract 3.5 percent in 2016: IMF

The International Monetary Fund (IMF) on Tuesday downgraded Brazil's 2016 growth forecast, saying its gross domestic product (GDP) was projected to contract 3.5 percent, sharply down from the previous forecast for a 1 percent contraction.

The IMF also revised its forecast for Brazil's GDP in 2017 to zero growth from a previously foreseen 2.3 percent economic expansion.

The downgrade to Brazil was in line with the Washington-based fund's downward revision to global growth in general in its latest "World Economic Outlook."

The global economy will expand 3.4 percent his year, down form a projected 3.6 percent in October, the IMF said Tuesday in a quarterly update.

"Growth forecasts for most emerging market and developing economies reveal a slower pickup than previously predicted," the IMF said on its website.

"Latin America and the Caribbean will see a contraction in 2016, reflecting the recession in Brazil and economic stress elsewhere in the region, even as most other countries in the region will continue to grow," the agency said.

The agency blamed Brazil's recession on "the political uncertainty and the continued fallout from the investigation into (corruption at) Petrobras," the state-run oil giant.

Both those factors "will affect the performance of the national economy," said the IMF.

Latin America as a whole is expected to see a 0.3 percent contraction this year, and a slight 1.6 percent growth in 2017, according to the IMF report. Endit