By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The World Bank reduced its forecast for Brazil’s economic growth this year to 0.3 percent in its latest World Economic Outlook report, released on yesterday (Monday, June 5th). The entity’s growth forecast is lower than the 0.5 percent growth forecast estimated by the market in Brazil’s Central Bank Focus Report.
“Activity indicators have improved, including resumption of industrial output growth and export expansion, as well as confidence gains,” says the World Bank report.
The report, however, stresses that Brazil should ‘slowly’ from the recession this year. “The country continues to struggle against the growth of unemployment and the considerable needs for fiscal adjustment,” concludes the report.
The latest estimate by the World Bank is 0.2-percentage point lower than that reported in January 2017. In 2018, the international entity continues to forecast Brazil’s growth at 1.8 percent, the same forecast released in its January report.
The financial market is more optimistic, forecasting economic growth at 0.5 percent this year, following the announcement last Friday that the country’s GDP increased by one percent in the first three months of the year. The estimate for inflation, according to the inflation index (IPCA), went from 3.95 percent to 3.90 percent. For 2018, the inflation forecast remained at 4.40 percent.
For financial institutions, the Selic rate will close 2017 and 2018 at 8.5 percent per year. Currently, it is at 10.25 percent per year. The Selic is one of the instruments used to influence economic activity and, consequently, inflation.