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Brazil's economy heading for depression after slumping 3.8% in 2015

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By Euronews  with Reuters
Brazil's economy heading for depression after slumping 3.8% in 2015

<p>The spectre of depression hangs over Brazil after its economy contracted sharply last year. </p> <p>Gross domestic product fell 3.8 percent as businesses invested less and laid off more than 1.5 million workers.</p> <p>Factors included <a href="http://www.euronews.com/2016/03/04/brazilian-police-bring-in-fromer-president-lula-da-silva-for-questioning-as/">political crises</a>, rising inflation and interest rates and dramatically lower prices of commodity exports.</p> <p>It was the largest annual contraction since 1990, when Brazil was struggling with hyperinflation and a debt default. </p> <p>The outlook is almost as grim with the central bank forecasting a 3.45 percent contraction for this year.</p> <p>Brazil is “replicating the lost decade of the ’80s in just two years,” Goldman Sachs economist Alberto Ramos said in a research report. He added that the economy was close to an outright depression given that its contraction began nearly two years ago.</p> <p>Brazil’s government said the poor data had been expected and added that it was focused on boosting the economy this year. “We want 2016 to be a year of recovery for jobs, employment, income, with economic growth,” Labour Minister Miguel Rossetto said.</p> <h3>The numbers</h3> <ul> <li>Brazil’s <span class="caps">GDP</span> contracted <strong>1.4 percent</strong> in the fourth quarter from the third, which was its fourth straight quarterly decline. It was down <strong>5.9 percent</strong> from the fourth quarter of 2014.</li> </ul> <ul> <li>Agriculture was the only bright spot, with a fourth-quarter growth rate of <strong>2.9 percent</strong> versus the third quarter.</li> </ul> <ul> <li>Brazil’s industry and services sector fell <strong>1.4 percent</strong> each in Q4.</li> </ul> <ul> <li>Household consumption declined for a fourth straight quarter, with a drop of <strong>1.3 percent</strong>.</li> </ul> <ul> <li>Investments plunged <strong>4.9 percent</strong>.</li> </ul> <ul> <li>Government consumption fell <strong>2.9 percent</strong> – the steepest quarterly decline since the end of 2008.</li> </ul>