Brazil Analysts Cut 2015 GDP Forecast, Boost Inflation Estimate

Brazil Analysts Cut 2015 GDP Forecast, Boost Inflation Estimate

By Mario Sergio Lima / Bloomberg

8:37 AM BRT
April 27, 2015

Brazil analysts lowered their estimate for economic growth this year and raised their inflation prediction, as the government negotiates with Congress over fiscal moves to trim the budget deficit.

Analysts cut their 2015 growth estimate to a decline of 1.1 percent from a 1.03 percent drop the prior week, according to the April 24 central bank survey of about 100 analysts published Monday. The economists forecast inflation will accelerate to 8.25 percent this year, up from last week’s forecast of 8.23 percent.

President Dilma Rousseff’s economic team is focused on reducing the federal debt to stave off a credit-rating downgrade. While tax increases and spending cuts are fueling inflation and stalling growth, analysts forecast the economy will rebound next year as confidence improves.

GDP will rise 1 percent in 2016 as inflation slows to 5.6 percent, according to the survey of economists, unchanged from last week. The central bank targets inflation at 4.5 percent, plus or minus two percentage points.

Policy makers have boosted the benchmark interest rate in four straight meetings to combat inflation, to 12.75 percent. The key rate will end this year at 13.25 percent, falling to 11.50 percent in 2016, according to the survey.

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