BRASILIA, March 16 (Reuters) - The outlook for Brazil’s economy deteriorated sharply, according to the latest weekly central bank survey of economists on Monday, which showed a particularly steep fall in forecasts for economic growth and interest rates this year to new lows.
Latin America’s largest economy is expected to expand by 1.68% next year, according to the average forecast in the central bank’s weekly ‘FOCUS’ survey of over 100 economists, down from 1.99% the week before and 2.23% a month ago.
That is well below the government’s downwardly-revised 2.1% forecast. Economy Minister Paulo Guedes still thinks 2.5% is possible, according to an interview with CNN Brasil broadcast on Sunday.
Against the backdrop of intense financial market volatility and plunging economic forecasts due to the global coronavirus pandemic, economists in the FOCUS survey slashed their average interest rate forecast for this year to 3.75% from 4.25%.
Brazil’s central bank is expected to trim its benchmark Selic rate by 25 basis points to 4.00% on Wednesday, but already some economists are calling for immediate emergency action.
This year’s average inflation forecast was reduced to 3.10% from 3.20%, the FOCUS survey showed, almost a full percentage point below the central bank’s official 2020 goal of 4.00%, while the real is seen ending the year at 4.35 per dollar compared with 4.20 per dollar in last week’s survey.
Next year’s inflation outlook dipped to 3.65% from the central bank’s official goal of 3.75%, and the average Selic forecast fell to 5.25% from 5.50% the week before. A month ago, it was 6.00%. (Reporting by Jamie McGeever, Editing by Nick Zieminski)