ZCZC
BCN-15
BRAZIL-ECONOMY-BANK
Brazil’s central bank slashes 2019 growth forecast
BRASILIA, June 28, 2019 (BSS/AFP) – Brazil’s central bank cut its full-
year economic growth forecast by more than half on Thursday as the worsening
outlook for Latin America’s biggest economy erodes business and consumer
confidence.
The revision comes as Brazil totters on the edge of recession after gross
domestic product shrank 0.2 percent in the first quarter — the first
contraction since it emerged from a devastating 2015-2016 crisis — and is
likely to fuel calls for the bank to cut interest rates to kick-start growth.
The bank expects the economy to expand by 0.8 percent this year, compared
with its forecast in March of two percent growth, putting it in line with
market estimates.
It reflects the slower-than-expected growth in the first three months, as
well as “the retreat in business and consumer confidence on spending and
investment,” the bank said.
Analysts expect the economy to expand by 0.87 percent this year, compared
with 1.1 percent in 2017 and 2018, after cutting their forecasts 17 weeks in
a row, a recent survey by the bank showed.
The central bank has so far resisted pressure to reduce its main interest
rate — already at a historic low of 6.5 percent — for fear of fanning
inflation as Bolsonaro struggles to push his signature pension reform through
Congress.
Adjusting the key Selic rate is seen by some analysts as one of the few
tools Brazil has to revive its export-driven economy as global conditions
deteriorate.
BSS/AFP/HR/0940