Private-sector analysts continued to forecast a 2.99 percent drop in Brazil's gross domestic product (GDP) in 2016, but they raised their inflation outlook to 7.0 percent at year's end, the Central Bank said Monday.

The GDP and inflation figures come from the Boletin Focus, a weekly Central Bank survey of analysts from about 100 private financial institutions in Brazil on the state of the national economy.

Brazil could be headed for a second straight year of economic contraction. The analysts surveyed by the monetary authority said the South American giant's economy shrank at its fastest clip of the last 25 years in 2015 - 3.71 percent.

The private-sector economists predicted that Brazil's economy would start recovering in 2017 with a 1 percent rise in GDP, up slightly from their 0.86-percent growth forecast in the previous survey.

Analysts, meanwhile, were more pessimistic about the inflation rate for this year, with their forecast rising from 6.93 percent to 7 percent.

That outlook is outside the government's target range of between 2.5 percent and 6.5 percent but still lower than Brazil's 10.67 percent inflation rate in 2015, the highest level in 13 years.

The analysts also raised their inflation forecast for 2017 from 5.2 percent last week to 5.4 percent.

Brazil, in a technical recession with GDP contracting for three consecutive quarters, has had its sovereign debt lowered to junk status by Standard & Poor's and Fitch Ratings.

Those downgrades have occurred even though analysts note that Brazil's foreign currency reserves are far in excess of its international liabilities.

The South American giant's economic growth has been hampered by spending cuts implemented by President Dilma Rousseff's administration to reduce the budget deficit and control inflation.