The economic authorities in Brazil have again downgraded the economy's growth forecast for this year which will now be 1%, according to the bi-monthly Budget reassessment from the Planning Ministry.
Only a week ago Finance Minister Guido Mantega had admitted for the first time the economy would contract and mentioned "in the range" of 2% of GDP, which he described as a "technical recession" because of two running negative quarters.
However the Brazilian Central Bank had already advanced an estimate of 1.2%.
"In the current scenario of global economic retraction a review of real GDP growth in 2009 was needed," said the release from the Planning ministry. This is the ministry's second report of the year. The first report estimated GDP growth, on which the federal budget is planned, at 2%, but has now been lowered to 1%.
Before the current global crisis triggered last year, the Brazilian government was forecasting 4.5% GDP growth for 2009, which already was below the estimated 5% on which the Growth Acceleration Program (PAC), – an ambitious infrastructure development plan -, had been forecasted.
But following the 3.6% contraction of the first quarter of 2009, the Budget reassessment lowered the target to 2%. The Brazilian economy in 2008 expanded 5.1%. The IMF estimates Latinamerica's largest economy will contract 1.3% in 2009.