World Economy

Brazil’s Economic Outlook Cut for Third Time

Brazil’s Economic Outlook Cut for Third Time
Brazil’s Economic Outlook Cut for Third Time

Economists reduced once again their outlook for Brazil’s economic performance for this year, as the country’s economy fails to regain traction amid poor consumer and business confidence.

Brazil’s gross domestic product is expected to contract 1.80% this year, compared with a contraction of 1.76% expected last week, according to a weekly central-bank survey of 100 economists. The forecasts for this year marked the third- consecutive downward revision by economists, Dow Jones reported.

For next year, economists kept their view for an expansion of just 0.20%. Brazil’s economy grew 0.1% last year, according to the country’s statistical bureau, the IBGE.

Meanwhile, economists increased their estimate for the 2015 inflation rate, as measured by the consumer-price index, to 9.25% from 9.23%, according to the survey. For next year, they kept their inflation estimate at 5.40%.

Survey respondents maintained their outlook for the benchmark Selic interest rate at the end of 2015 at 14.25%, and also for the next year at 12%. The rate is currently at 14.25%.

The forecast for the 2015 trade balance was kept at $6.40 billion, according to the survey.

Meanwhile, the Brazilian currency real lost 1% at the end of trading on Friday and begins this week at 3.42 reais to the US dollar, the lowest in twelve years, because of the political and economic uncertainties surrounding Latin America’s largest economy.

The strong reaction in the money exchange market followed the announcement by the administration of President Dilma Rousseff that the original budget primary surplus of 1.2% was to be lowered to 0.15%.