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Brazilian financial market reduces 2019 growth forecast to 1.71 percent

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Christian Fernsby |
Brazil port
LatAm   The growth forecast was at 2.55 percent at the beginning of the year

Brazilian financial market analysts lowered the gross domestic product (GDP) growth forecast for the current year from 1.95 percent to 1.71 percent for the eighth time in a row, the Central Bank of Brazil said.

According to the Focus survey conducted by the central bank, the growth forecast was at 2.55 percent at the beginning of the year.

The reduction is related to a slower-than-expected recovery pace and the difficulty for the government to secure support in Congress to approve the proposed pension reform.

The financial analysts also reduced the GDP growth forecast for next year from 2.58 percent to 2.5 percent.

The forecast for inflation dropped from 4.06 percent to 4.01 percent for 2019 and remained steady at 4 percent for 2020.

The numbers also reconfirm the expectation that the monetary authority will maintain the basic interest rate at its current level of 6.5 percent at least through the end of the year, the lowest in history.

In terms of the exchange rate, the forecast went from 3.7 reals to 3.75 reals (0.94 U.S. dollar to 0.95 dollar) to 1 dollar for the end of the year and from 3.78 reals to 3.8 reals (0.96 dollar to 0.97 dollar) to 1 dollar by the end of 2020.

The forecast for trade balance was at a positive balance of 50 billion dollars for 2019 and 46 billion dollars in 2020.

The forecast for foreign direct investment was 81.89 billion dollars in 2019 and 83.38 billion dollars in 2020.

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