Economists increased their estimates for inflation in Brazil this year, underscoring the challenges the central bank faces to curb prices amid the country’s recession, according to the central bank’s weekly survey published Monday.
Economists raised their estimates for inflation, as measured by the consumer price index, to a 7.12% increase from 7.06% last week, according to the survey of 100 economists. It was the third consecutive increase in outlook, Nasdaq reported.
They also kept their outlook for the year-end Selic benchmark interest rate at 12.88% for 2016 and maintained their Selic rate view for 2017 at 11.25%.
Economists estimate Brazil’s gross domestic product is likely to contract 3.71% this year, compared with last week’s expectation of a 3.81% contraction.
Last year, Brazil’s economy contracted 3.80%, according to the country’s statistical bureau, IBGE.
For next year, economists increased their view to an expansion of 0.85% from 0.55%.
They also predict Brazil will post a $50 billion trade surplus this year, the same estimates a week ago.
Brazil’s economy continued to shrink in the first quarter of 2016, contracting by 0.3%, BBC said.
It was the fifth consecutive quarter in which the economy has shrunk.
However, the figure was not as bad as the 0.8% contraction that had been predicted by economists.
As well as its worst recession in decades, Brazil is grappling with political crisis, following the removal from office of President Dilma Rousseff pending an impeachment trial.
The Instituto Brasileiro de Geografia e Estatistica (IBGE) also said that Brazil’s GDP fell by 5.4% year-on-year - which was also better than the 6.1% contraction forecast by Itau Unibanco.
Earlier, the Organization for Economic Cooperation and Development cut its economic growth forecast for Brazil, citing political and corruption concerns.
The Brazilian economy is now expected to contract by 4.3% this year, the OECD said.
Production fell in all the three main economic sectors: agriculture, industry and services.
Exports were a rare bright spot, however, increasing by 6.5% compared with the fourth quarter after a sharp fall in the value of the currency, real.
