Bloomberg News

Rousseff Said to Believe Brazilian Economy May Be Stalling

September 01, 2011

(Adds interest rate in third paragraph.)

Sept. 1 (Bloomberg) -- President Dilma Rousseff believes that the economy expanded less than 0.8 percent in the second quarter, a sign that growth in Latin America’s biggest economy is stalling, a government official said.

The government expects the monthly inflation rate to be close to zero in the final quarter of the year and is working with an internal economic growth forecast this year of 3.8 percent, said the official, who while close to the president isn’t authorized to discuss her views publicly.

Yesterday’s surprise decision by the central bank to cut the benchmark interest rate half a percentage point to 12 percent took into account Brazil’s weakening economy, said the official. An increase in the country’s minimum wage and lower borrowing costs should help boost growth next year without the need for additional fiscal stimulus, he said.

Economists expect Brazil’s gross domestic product expanded 0.8 percent in the second quarter from the first three months of the year, according to the median estimate in a Bloomberg survey of 40 analysts. The national statistics agency publishes the GDP report tomorrow at 8 a.m. New York time.

--Editors: Josh Goodman, Ken Fireman

To contact the reporter on this story: Carla Simoes in Brasilia Newsroom at csimoes1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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