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Economic pain hitting Brazil

Economists trimmed forecasts for Brazil’s economic growth this year and next for the fifth straight week, a central bank survey showed yesterday.

The largest Latin American economy – and one of the fastest growing countries only two years ago – is now expected to expand just 1.00 per cent this year, down from 1.03 per cent seen in the prior week, according to the poll’s median forecasts.

Brazilian businesses have been suffering from lacklustre investment levels, rising labour costs and a heavy tax bur- den.

President Dilma Rousseff has offered several stimulus measures over the past year and according to media reports is studying further steps to revive the country’s growth.

The central bank also cut interest rates 10 straight times to a record low of 7.25 per cent, and is expected to leave borrowing costs there at least through to the end of 2013, according to the poll of around 100 econo- mists.

Estimates for 2012 and 2013 inflation were revised up slight- ly.

Consumer prices should increase 5.60 per cent in 2012, up from a forecast of 5.58 per cent in the prior week, and 5.42 per cent in 2013, up from an estimate of 5.40 per cent previously.

The government targets inflation at 4.5 per cent, with a tolerance margin of 2 percentage points in each direc- tion.

Inflation accelerated more than expected in November after transportation and electricity prices spiked.

 

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