(Corrects central bank growth forecast in last paragraph of story originally published Jan. 14.)
Analysts covering Brazil’s economy cut their forecast for 2013 growth while boosting their inflation prediction for the second week in a row, as government stimulus struggles to lift the economy out of a slowdown.
Brazil’s gross domestic product will expand 3.2 percent this year, while inflation will reach 5.53 percent, according to the median estimate in a central bank survey of about 100 analysts published today. Analysts had forecast 3.26 percent GDP growth and 5.49 percent inflation the previous week.
In 2014, inflation will slow to 5.50 percent, while growth will speed up to 3.6 percent, the survey showed.
President Dilma Rousseff’s administration has sought to spur flagging growth as Brazil’s $2.5 trillion economy expanded by 1 percent last year, according to central bank estimates. Rousseff on Dec. 22 called on businesses to increase investments after policy makers reduced benchmark interest rates to a record low, slashed reserve requirements to help spur investment and cut taxes on payrolls and consumer goods last year.
Government action has so far yielded mixed results. Industrial production in the world’s second-largest emerging market fell in November for the second time in three months on declining capital goods production. Still, October retail sales grew at the fastest pace in three months, with consumer demand driven by stimulus and near record-low unemployment.
Flagging growth has not slowed inflation, which accelerated faster than economists’ estimates in December for the sixth straight month, on higher personal expenses.
Consumer price increases will decline throughout this year, central bank President Alexandre Tombini said in a Jan. 10 statement. Government officials have also enacted measures to cut electricity costs by 20 percent, which may help ease inflationary pressure.
Brazil’s gross domestic product will expand 3 percent to 4 percent this year, Finance Minister Guido Mantega said on Dec. 27. The central bank forecasts growth of 3.3 percent in the four quarters through the third quarter of 2013.
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