Brazil slashes 2017 growth forecast to 0.5%

BRASÍLIA: Brazil halved its 2017 economic growth forecast Wednesday, to 0.5 percent from 1.0 percent, indicating weaker confidence in a quick exit from the country’s worst recession in history.

The government had already scaled back its 2017 forecast last November from 1.6 percent. However, the finance ministry still remains bullish that Brazil’s economy will rebound, predicting 2.5 percent growth in 2018.

The less optimistic outlook for this year brings Brazil’s government into line with market expectations, which are for 0.48 percent growth in gross domestic produc—the broad measure of the economy’s output—and 2.5 percent in 2018.

Finance ministry official Fabio Kanczuk said Brazil’s fight back from more than two straight years of recession will bear fruit in the fourth quarter of this year when GDP growth will be 2.7 percent higher than during the same period last year.

“This 2.7 percent is more important” as a signal that the economy is “growing robustly,” he said.

Good news was also expected by the government on the inflation front, where the rate was until recently stubbornly high.

According to the finance ministry, prices will increase 4.3 percent over 2017, less than the previous estimate of 4.7 percent and below the target of 4.5 percent.