The country has been grappling with runaway inflation levels, and the central bank has already hiked borrowing costs six times in the face of recession. The benchmark Selic sits at 13.75% and economists anticipate the central bank could hike rates to 14.5% by the end of the year as the economy shrinks 1.5%.

Consequently, Goldman Sachs is predicting a deeper recession in 2015, with the economy contracting 1.5% in the second quarter, compared to previous estimates of a 1.25% contraction. For 2015, the bank projects a 1.4% recession.

iShares MSCI Brazil Capped ETF

For more information on Brazil, visit our Brazil category.

Max Chen contributed to this article.

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