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The central bank of Brazil expects the nation's gross domestic product (GDP) to shrink 3.5% in 2016 and inflation to hit 6.6%. The latest economic anticipations by the bank are much negative than its earlier predictions in December when the bank expected the country's GDP to contract by 1.9% and inflation to reach 6.2%.

On March 3, an official report showed that the nation's economy declined 3.8% in 2015, the worst downfall since 25 years. If the bank's current predictions turn out to be accurate, then Brazil will experience an economic slowdown for the next two successive years, marking the first straight fall since 1930.

However, the bank's predictions are more optimistic than private market researchers, who anticipate the nation's economy to shrink by 3.66% in 2015, and inflation to reach 7.31%. FOXNEWS Latino quoted the bank's report, which anticipated benchmark SELIC rate to continue at 14.25% in 2016, the greatest rate since nine years. The bank also expects the exchange rate to the US dollar and real to calm, with the dollar trading at 3.70 reais.

The Central Bank expects Brazil's inflation rate to drop to 4.9% in 2017. The officials at the bank blamed the ongoing political hurdles in the nation for escalating the negative forecast. In addition, the Congress is frightening to eliminate President Dilma Rousseff from power and the Democratic Movement Party (PMDB) of VP Micheal Temer has decided to quit the government. The resolution by Micheal's PMDB comes amid a potential accusation.

However, Rousseff is trying to build support among the Congress people, despite the ongoing effects to eliminate her from power. Her government has faced many serious problems like the corruption rumour involving the government-run oil firm Petrobras that impacted the country's fiscal policy.

Brazil's public sector recorded a primary shortage of R$23 billion in February while the central government registered a deficit of R$26.4 billion. On the other hand, government-run firms and regional governments recorded surpluses of R$622 million and R$2.7 billion respectively during the reporting period, according to a press release released by the Central Bank of Brazil.

The federal securities loan, outside the chief bank, amounted to R$2,678.2 billion during February, increased by R$71.2 billion from January. Total loans in the public sector totalled to R$2,186.8 billion during the month, increasing 1 p.p. of GDP in January. The nominal deficit in February amounted to R$52.8 billion.

According to THE WALL STREET JOURNAL, the bank has summoned the country to implement structural changes and focus on primary surpluses in order to eliminate concerns regarding the country's monetary sustainability. The primary budget number, which is used to gauge the government's ability to save cash, is calculated by the formula government sales minus all government expenditure, excluding interest payments.

Brazil is the largest economy in Latin America that faces critical political issues amid the ongoing global financial crisis. The country's policymakers are attempting to uplift the economy from the horrible economic slowdown.