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.

Mercopress

Tags:

You May Also Like

London and New York Are Next for this Brazilian Behavioral Research Firm

Conducting behavioral research and seeking innovative solutions for the corporate world. That is the ...

Brazil’s Biofach Shows the Country’s Organic Sector Clout

In Brazil, the organic product sector has become a growing market, expanding above the ...

Pope Benedict XVI

Pope Gives Brazil Its Own Saint. It Might Help Keep Faithful

Pope Benedict XVI begins his first trip to Latin America, today, traveling to Brazil. ...

Brazil Market Falls 60% from Peak Performance in May

For the first time in three years, this Monday, October 27, Brazil's stock exchange, ...

Brazil’s Cattle Disease Spreads to 5 States and Could Cost US$ 30 Billion

Brazil created Tuesday, October 25, a special inter-ministerial task force to coordinate efforts in ...

Brazil’s First National Gays and Transsexuals Conference Is Sponsored by Government

Brazil's First National Conference of Gays, Lesbians, Bisexuals, Transvestites and Transsexuals received its official ...

Brazil Confident Its Suggestion for UN Reform Will Win

The Brazilian government is confident that the project proposed by the G4 (a group ...

While Death Toll Rises to Over 180, in Rio, Forecast is for Continued Rain

Rio’s rains now have killed at least 180 people and over 14,000 were left ...

Revlon’s New Face

One of the strategies of Revlon’s new spokesmodel was to abbreviate her name from ...

Brazil Welcomes Palestinian Refugees Barred from Iraq

Brazil received this Friday, September 21, 35 Palestinian refugees who were staying in camps ...

WordPress database error: [Table './brazzil3_live/wp_wfHits' is marked as crashed and last (automatic?) repair failed]
SHOW FULL COLUMNS FROM `wp_wfHits`