SAO PAULO – The Central Bank revised on Thursday its 2017 economic growth forecast for Brazil downward from 0.80 percent to 0.50 percent while saying that inflation would be lower than previously projected.
The Central Bank said in its first-quarter 2017 report that economic indicators were sending “mixed signals” that pointed to “stabilization in the economy in the short term.”
Agricultural production is projected to rise 6.4 percent in 2017, an upward revision of 2.4 percent from the previous forecast, while industrial production is expected to fall again due to a forecast contraction of 2.7 percent in civilian construction and anemic growth in the mining and manufacturing sectors, the Central Bank said.
Consumer spending is projected to rise 0.50 percent, an upward revision of one-tenth of a percentage point from the prior report.
The Central Bank noted that consumer spending fell 4.2 percent in 2016.
Inflation is trending in the right direction and should finish the year between 3.9 percent and 4 percent, the Central Bank said.
The fourth-quarter 2016 report projected an inflation rate of between 4.4 percent and 4.7 percent for this year.
The Central Bank’s downward revision to its gross domestic product (GDP) forecast comes a week after the government cut its economic growth forecast from 1 percent to 0.50 percent.
Brazil’s economy contracted 3.6 percent in 2016, remaining in recession for two consecutive years for the first time since 1930.
The economy contracted 2.5 percent in the fourth quarter of 2016, compared to the same period a year earlier.
Brazil’s economy, the largest in Latin America, contracted by 3.8 percent in 2015 and 0.10 percent in 2014.