Bloomberg News

Credit Suisse Cuts Brazil’s 2012 GDP Growth Forecast to 1.5%

June 20, 2012

Brazil’s economy will expand 1.5 percent this year on slowing investment and weak industrial production, Credit Suisse Group AG said today.

The second-largest Swiss bank reduced its 2012 growth forecast for Latin America’s biggest economy from 2 percent, according to a report published today. The Zurich-based lender kept its 2013 growth forecast unchanged at 4 percent.

President Dilma Rousseff’s efforts to revive economic growth in the world’s second-biggest emerging market after China haven’t prevented economists from lowering their growth forecast. Policy makers cut the benchmark interest rate to a record, cut taxes, increased subsidized credit and took measures to boost loans in a bid to shield Brazil from the euro debt crisis.

“The high global uncertainty and the low probability that we attribute to a significant expansion of the economy in the coming quarters justify the cut in our growth forecast,” Credit Suisse said in the report.

Central bank President Alexandre Tombini said yesterday that record low unemployment will help fuel economic growth that will quicken to 4.5 percent in the first quarter of 2013 from a year earlier. Growth will accelerate to a 4 percent pace in the last quarter of 2012, he said.

Finance Minister Guido Mantega said the government would be satisfied if the economy’s expansion in 2012 exceeded last year’s 2.7 percent growth rate, which was the second-worst performance since 2003.

Analysts expect the economy to grow 2.3 percent this year, according to a central bank survey published this week.

“It’s a joke,” Mantega told reporters in Rio de Janeiro today when asked about Credit Suisse’s 1.5 percent 2012 growth forecast. Brazil “will grow much more.”

To contact the reporters on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net Andre Soliani in Brasilia at asoliani@bloomberg.net

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


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