Brazil an­a­lysts see faster in­fla­tion, deeper re­ces­sion

The Pak Banker - - BUSINESS -

BRASÍLIA: Brazil an­a­lysts forecast faster in­fla­tion and a deeper con­trac­tion next year, putting them at odds with the coun­try's top eco­nomic of­fi­cials.

Brazil's in­fla­tion will ac­cel­er­ate 5.50 per­cent in 2016 com­pared to last week's es­ti­mate of 5.44 per­cent, ac­cord­ing to the Aug. 21 cen­tral bank sur­vey of about 100 an­a­lysts. They also forecast the econ­omy will shrink 0.24 per­cent in 2016, down from a 0.15 per­cent con­trac­tion last week. It was the third straight week econ­o­mists in­creased their con­sumer price forecast and cut their GDP es­ti­mate for next year.

Brazil's pol­icy mak­ers have raised taxes, cut spend­ing and lifted the key rate to the high­est level in nine years as they pledge to re-bal­ance fis­cal ac­counts and slow in­fla­tion to the 4.5 per­cent tar­get by the end of next year. An­a­lysts' growth out­look are also at odds with cen­tral bank Pres­i­dent Alexan­dre Tom­bini and Fi­nance Min­is­ter Joaquim Levy's as­sess­ment that Brazil's econ­omy will ex­pand next year as ex­ports grow. Brazil's in­fla­tion in the 12 months through mid-Au­gust reached 9.57 per­cent. Con­sumer prices are be­ing fanned in part by a weaker real, which has dropped 24 per­cent against the US dol­lar this year.

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