Brazil economists cut their 2015 growth forecast for the first time in five weeks on prospects that spending cuts and higher energy and gasoline prices will slow the country’s economic recovery.
Brazil’s gross domestic product will expand 1.20 percent in 2015, compared with the previous week’s forecast of 1.5 percent, according to the Aug. 8 central bank survey of about 100 analysts published today. That’s the lowest estimate since the central bank started publishing the data in January. Economists forecast 0.81 percent growth this year, compared with 0.86 percent the previous week.
President Dilma Rousseff is working to stem a worsening economic outlook as she campaigns for re-election in October. Annual inflation at the upper limit of policy makers’ target range is curbing purchasing power and undermining investment. The central bank last week reaffirmed plans not to cut the key rate and said effects of the monetary tightening cycle ended in April are still to materialize.
“Next year will be a time of adjustments — increases to government regulated prices will be needed and measures on the fiscal side must be taken to prevent losing the investment grade rating,” Newton Rosa, chief economist at Sul America Investimentos, said in a phone interview from Sao Paulo. “There are no signs that point to a solution to the problems that are affecting industry, specially investments.”