Brazil Analysts Boost 2015 CPI, Cut GDP for 14th Straight Week
8:41 AM BRT
April 6, 2015
Brazil economists raised their estimate for 2015 inflation and cut their growth forecast for the 14th straight week, as the government contends with a combination of above-target inflation and stagnating activity.
Analysts raised their 2015 inflation estimate to 8.20 percent from 8.13 the prior week, according to the Apr. 2 central bank survey of about 100 analysts published today. The last time inflation ended the year above the government-set target was 2003. The economists also lowered their forecast for economic growth to a decline of 1.01 percent from negative 1 percent previously. Analyst kept their forecast for the key rate at year-end at 13.25 percent.
In an interview last week, President Dilma Rousseff committed herself to tighter fiscal discipline even as her approval rating is at the lowest for any president in 15 years. The fiscal adjustment will slow the economy in the short term and lay the foundation for recovery as confidence arises, according to Finance Minister Joaquim Levy.
Brazil’s inflation in the 12 months through mid-February accelerated to a near-decade high of 7.9 percent from 7.36 percent a month earlier. Food, fuel and electricity price increases accounted for more than three-quarters of the monthly reading.
The central bank targets annual inflation of 4.5 percent, plus or minus two percentage points. Bank directors have raised the benchmark interest rate four straight times to a six-year high of 12.75 percent. Monetary policy is and will remain vigilant to bring consumer prices to the center of the target by the end of 2016, said economic policy director Luiz Awazu Pereira.
Economists in the survey see inflation easing to 5.60 percent next year, with gross domestic product growth of 1.1 percent, up from the previous week’s estimate of 1.05 percent.
Brazil’s economy unexpectedly grew in the fourth quarter last year as gross domestic product rose 0.3 percent from the three previous months. Analysts who had forecast stagnation for full-year 2014 were surprised by growth of 0.1 percent, down from a revised 2.7 percent in 2013. The statistics agency used a new methodology to arrive at the GDP numbers.