BRASILIA (Reuters) – Economists trimmed their 2019 Brazilian economic growth forecasts for a 19th consecutive week, a central bank survey showed on Monday, but no changes in the outlook for other major macroeconomic variables suggested the worst may be over.
While this year’s average growth forecast was trimmed to a new low of 0.82% from 0.85% the week before, the estimates for inflation, the exchange rate and official interest rates for this year out to 2022 were left unchanged.
The average forecasts from about 100 financial institutions in the central bank’s weekly ‘FOCUS’ surveys provide a comprehensive, real-time guide to market sentiment on the Brazilian economy.
Having contracted 0.2% in the first quarter of the year, the economy likely stagnated, possibly even slipping into recession, in the second quarter, recent economic indicators suggested.
But the latest FOCUS survey, released just as the lower house of Congress appeared to close to approving an ambitious overhaul of Brazil’s social security system, points to stabilization, at least for now.
On average, economists see inflation ending this year at 3.80%, the dollar at 3.80 reais (), and the central bank’s benchmark Selic rate at 5.50%, all unchanged from the previous FOCUS survey.
On Thursday, a special pension reform committee in Congress passed the basic text of a bill that aims to generate savings of around 1 trillion reais ($264 billion) over 10 years, shore up public finances, and spur investment and economic growth.
Voting in the plenary could begin as early as Tuesday, according to Rodrigo Maia, the lower house president. Central bank President Roberto Campos Neto said last week that concrete progress on fiscal and economic reforms is crucial to a benign outlook for inflation.
Economists see the economy growing 2.20% next year and 2.50% in each of the following two years, and expect 3.91% inflation at the end of next year, and 3.75% at the end of the next two years, the latest FOCUS survey showed.
The average Selic forecast for end-2020 was also left on hold at 6.00%, the survey showed.
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