BRASÍLIA: Analysts expect Brazil’s economy to contract by 3.40 percent this year, with inflation hitting 7.62 percent, the Central Bank said Monday. Last week, analysts said they expected Brazil’s economy to contract by 3.33 percent this year and prices to rise by 7.61 percent.
The gross domestic product (GDP) and inflation figures come from the Boletin Focus, a weekly Central Bank survey of analysts from about 100 private financial institutions on the state of the national economy. If the forecasts prove to be accurate, Brazil’s economy is headed for its worst economic performance since 1990, when it contracted by 4.35 percent.
Brazil’s economy grew just 0.10 percent in 2014. Analysts expect Latin America’s largest economy to grow by 0.50 percent in 2017, a number that was revised downward from last week’s 0.59 percent estimate.
Brazil had an inflation rate of 10.67 percent in 2015, the highest level in 13 years, while the economy contracted by 3.71 percent, according to analysts surveyed for the Boletin Focus. The government expects inflation to end the year within its target range of 4.5 percent, with a 2 percent band that would put the top end rate at 6.5 percent.
In an effort to bolster the fiscal situation, the government said last Friday that it planned to cut spending by 23.4 billion reais (about $5.78 billion) this year.
The government’s goal is to achieve a primary budget surplus equivalent to 0.50 percent of GDP. The government started using the Boletin Focus in preparing its own forecasts last year. EFE
