The Brazilian economy will contract 3.5 percent in 2016, agency Fitch Ratings has predicted.

In December, Fitch estimated a 2.5-percent decline for the Brazilian economy this year.

In a statement issued on Monday, the rating agency said it reviewed its outlook for Brazil due to “weakening commodity prices”, the impact of “heightened political uncertainty” on confidence, and “deteriorating labour market and credit conditions”, as well as the macro policy tightening in 2015.

In its latest report “Global Economic Outlook”, Fitch also reviewed its forecast for the Chinese economy. “Growth in China is expected to be slightly weaker at 6.2 percent (down from 6.3 percent) reflecting revisions to external demand,” it said.

“Despite the considerable challenges [China] faces, there look to be sufficient policy levers available and enough diversity in growth drivers to avoid a hard landing in 2016,” Fitch said in the statement.

In its latest report, Fitch said it has made “widespread cuts in growth forecasts”, but noted that “no global recession” is expected in 2016.