IMF watching Brazil; 'for now' maintains 0.2% GDP forecast

The International Monetary Fund is monitoring the developing political situation in Brazil, but "for now" is maintaining the forecast for a slight economic recovery this year, a fund official said today.

Beset by corruption charges, Brazil's President Michel Temer yesterday defiantly refused to resign, but the investigation into his activities sparked a sharp downturn in the stock market which caused the Sao Paulo market to halt trading temporarily after a 10 percent plunge.

The forecast for slight recovery comes after two years of recession in the huge South American economy, including a 3.6 percent contraction last year and a 3.8 percent downturn in 2015, the worst performance since 1948.

Just last month, IMF Managing Director Christine Lagarde praised Brazil for finally turning the corner, but the political turmoil could threaten that progress.

Temer, who himself came to office to replace impeached president Dilma Rousseff, is under investigation for allegedly authorising payment of hush money to a politician imprisoned for corruption.

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