Bloomberg News

Brazil Economists Cut GDP Forecasts for This Year and Next

February 18, 2013

Analysts covering Brazil’s economy lowered their forecasts for economic growth this year and next, as the government struggles to boost growth amid inflation running faster than the central bank’s target.

Brazil’s gross domestic product will expand 3.08 percent this year and 3.65 percent in 2014, according to the median estimate in a central bank survey of about 100 analysts published today. Analysts had forecast 3.09 percent and 3.80 percent respectively the previous week. The analysts also cut their forecast for 2013 inflation for the first time since November, to 5.70 percent from 5.71 percent.

President Dilma Rousseff’s administration is working to tame the highest inflation in a year while spurring growth that’s the slowest among major emerging markets. To spark activity while cooling consumer prices, the government has cut taxes on payrolls, consumer goods and electricity, allowed the real to strengthen the most among major currencies this year and lowered the benchmark interest rate to a record 7.25 percent.

The measures have failed so far to slow inflation. Prices in January jumped from the month before by the most in almost eight years, while annual inflation rose for the seventh straight month, to 6.15 percent. Finance Minister Guido Mantega said on Feb. 15 that officials will do what it takes to fight rising prices, adding that rate increases are a possible tool. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

Brazil’s gross domestic product expanded 1 percent last year, the central bank estimated in December. Expansion in the world’s sixth-largest economy will reach 3 percent to 4 percent this year, according to Mantega.

To contact the reporter on this story: Matthew Malinowski in Brasilia at mmalinowski@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net


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