By Marla Dickerson and Luciana Magalhaes

SÃO PAULO -- The Brazilian government on Monday reduced its 2017 annual GDP forecast to 1.0% from 1.6%, a sign that Latin America's largest economy is struggling to rebound from a brutal recession.

Fabio Kanczuk, secretary of economic policy for Brazil's Finance Ministry, made the announcement at a press conference in Brasília.

Low oil prices and the lingering effects of a massive corruption scandal have hammered the country's key oil and gas sector, as well as state-run Petróleo Brasileiro SA Petrobras, as the company is known, is Brazil's largest company and biggest single source of investment.

Giant construction firms caught up in the graft probe have likewise been paralyzed, sending layoffs rippling through the economy.

Unemployment hit 11.8% in the June to August period. Around 12 million Brazilians are unemployed. Rising joblessness and falling incomes have hurt retailers, while sales of homes and cars have plummeted.

Write to Marla Dickerson at and Luciana Magalhaes at

(END) Dow Jones Newswires

November 21, 2016 15:10 ET (20:10 GMT)

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