Brazilian Economists Expecting Brazil Economy to Shrink

Street vendors in Brazil This year, Brazil's economy could shrink for the first time in 17 years as the global recession prompts Brazilian companies to cut output and staffing according to a Brazilian Central Bank survey of 100 economists released this Monday, April 6.

The median estimate from the one hundred economists was a contraction of 0.19% this year, down from zero growth a week ago. This coincides with reports from banks such as Morgan Stanley, Deutsche Bank AG and BNP Paribas which also forecast that Latinamerica's largest economy (1.5 trillion US dollars) will shrink this year.

Brazilian industrial production and demand weakened in the first three months of the year after a record contraction in the last quarter of 2008 as the full impact of the world's largest recession since World War II reached the shores of Mercosur main economy.

Brazil's gross domestic product will shrink 4.5% in 2009, Morgan Stanley said in a March 16 research report. BNP Paribas on March 10 forecast Brazil's GDP would shrink 1.5% this year, while Deutsche Bank forecasts a 1% contraction.

In a bid to counter recession, the Central Bank is expected to lower the benchmark interest rate Selic to a record low 9.25% by year- end. On March 11 the bank cut the overnight rate by 1.5 percentage points, the biggest reduction in five years, to 11.25% percent, matching the record low in place from September 2007 through April 2008.

Falling demand has helped rein in consumer prices. Analysts expect consumer prices to rise 4.26% in 2009, less than the midpoint of Brazil's inflation target, according to the median forecast in the central bank survey.

The central bank on March 30 indicated that lower interest rates coupled with rising household income may spark a rebound by year-end. "Recent results show a relative recovery, in the margin of the Brazilian economy," the bank said.

Central bank President Henrique Meirelles on March 25 said that the Brazilian economy should beat forecasts that policy makers view as "pessimistic."

The bank's policy makers said income gains were sustaining retail sales while revising their 2009 GDP forecast to 1.2%, down from a forecast of 3.2% made in December.




You May Also Like

Brazil Still Mistreating Its Delinquent Minors, Says OAS

A group of human rights organizations has released a report on the situation in ...

Self-Medication Fever

Eighty million Brazilians, more than half the population, self-medicate regularly according to the Brazilian ...

Two or Three Things Porto Alegre (Brazil) Taught the World

It’s not Paris or Tokyo, Beijing or New York. Nor is it São Paulo ...

Brazil Puts Nukes on Fast Track and Vows to Build 60 Nuclear Plants

Brazil's minister of Mines and Energy, Edison Lobão, stated this Friday, September 12, in ...

Haiti’s President Elect Thanks Brazil and Plans do Visit Country

Brazilian Minister of Foreign Relations, Celso Amorim, called Haiti’s elected President, René Préval, this ...

We’ve Tried the Rest. How About a Messiah Now for President of Brazil?

Brazil has had in modern times citizens of the most varied tendencies occupying the ...

Brazilian Inflation Goes Up. It’s 0.43% in January

Brazil's  inflation as measured by the General Index of Prices – Domestic Availability (IGP-DI) ...

Brazilian Cinema: Lula on Screen in Oxford

It looks as if I won’t be able to make the first of the ...

A Small Brazilian Curtain Firm Trying to Make It Big Overseas

JJ Cortinas, a curtain company from the southeastern Brazilian state of São Paulo, has ...

Iran Repays Brazil’s Backing Becoming Top Buyer of Brazilian Beef

Russians have lost to the Iranians the top post as Brazil’s largest buyer of ...