BRASILIA (Reuters) – Expectations for Brazilian economic growth, inflation and interest rates this year sank to new lows, a weekly central bank survey of economists showed on Monday, as the coronavirus cloud over Latin America’s largest economy continued to darken.
The economy is now expected to shrink by 3% this year, according to the average forecast of around 100 financial institutions in the bank’s ‘FOCUS’ survey, a full percentage point down from last week’s forecast of 2% contraction.
It was the tenth downward revision in a row, and is more in line with a clutch of global institutions, including the World Bank and International Monetary Fund, who say 2020 will mark one of Brazil’s biggest economic crashes in decades.
The government and central bank are sticking to their official forecast of zero growth for now, but are widely expected to revise that lower in due course.
The FOCUS survey also showed economists now expect the central bank’s benchmark Selic rate will end the year at 3.00%, down from 3.25% last week. That would signify another 75 basis points of easing from its current 3.75%.
End-year inflation is now projected to be 2.23%, significantly below the central bank’s official goal of 4.00%. The average forecast for next year fell to 3.40%, also further below the central bank’s 2021 target of 3.75%.
The growth outlook for next year improved, however, for the second week in a row, with the average forecast rising to 3.1% from 2.7%, the survey showed.
(Reporting by Jamie McGeever; Editing by Nick Zieminski)