Brazil’s economy shrank 1.7 percent in the third quarter following a 1.9 percent decrease in the April to June quarter, according to media reports. This is the third straight quarter of economic downturn for the largest economy in the Latin America region.

Economists polled by Bloomberg had predicted Brazil’s GDP would contract by 1.2 percent. It's reportedly the first time that the country has suffered three consecutive quarters of negative growth since the 1990s. Rising unemployment and higher inflation reportedly sapped domestic demand during the third quarter.

"While a sharp drop in volatile agricultural output slightly exaggerates the third quarter's contraction, Brazil's economy is as bad as the headline numbers look," Bill Adams, senior international economist at PNC Financial Services Group, said, in an emailed statement.

In recent months a nationwide corruption investigation, including at state-backed oil company Petrobras, has reportedly caused political gridlock, delaying President Dilma Rousseff's efforts to pass measures to fortify fiscal accounts and revive confidence.

Brazil's currency, the real, was reportedly steady in early trading Tuesday, after suffering a series of losses following as a result of the Petrobras corruption scandal.

"A stabilization in inflation could create room for the central bank to cut interest rates by mid 2016, potentially laying groundwork for a return to growth next year," Adams said, adding that "the weak competitiveness of Brazil's non-commodity sectors and the persistence of low global commodity prices" could make a recovery tougher.