WORLD Brazil's GDP contraction forecast at 5.66 pct in 2020: analysts

WORLD

Brazil's GDP contraction forecast at 5.66 pct in 2020: analysts

Xinhua

07:53, August 04, 2020


BRASILIA, Aug. 3 (Xinhua) -- Brazilian financial analysts for the fifth consecutive week forecast a smaller drop in gross domestic product (GDP) this year, adjusting from a 5.77 percent contraction to a 5.66 percent contraction, the Central Bank of Brazil said on Monday.

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Their growth forecast for 2021 remained steady at 3.5 percent, according to the bank's weekly survey of leading financial institutions in Brazil.

Four weeks ago, analysts projected a 6.5 percent plunge in GDP.

Regarding inflation, analysts reduced their forecast from 1.67 percent to 1.63 percent in 2020, and maintained it at 3 percent for 2021.

The inflation forecasts fall within the government target of 4 percent in 2020 and 3.75 percent in 2021, with a 1.5 point margin of error up or down.

Their forecast for the benchmark interest rate, currently at 2.25 percent annually, remained unchanged at 2 percent by the end of the year and at 3 percent by the end of the next.

That estimate means analysts expect the bank's Monetary Policy Committee to further cut the benchmark rate by 0.25 percentage points, possibly at this week's meeting. The decision is to be announced on Wednesday.

Regarding the trade balance, analysts expect a surplus of 55 billion U.S. dollars in 2020 and 53.31 billion U.S. dollars in 2021. 

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