BRASILIA, June 1 (Reuters) - The outlook for Brazil’s economy deteriorated for a 16th week in a row, a central bank survey of economists showed on Monday, with the new consensus of a 6.25% decline putting the government firmly at the optimistic end of the spectrum.
The government expects gross domestic product will contract by 4.7% this year, which itself would be a record, and has based its budget deficit and national debt estimates around it.
But the central bank’s weekly ‘FOCUS’ survey of around 100 financial institutions shows the average forecast fell to -6.25% from -5.9% the week before, in line with the median forecast in a Reuters poll of economists of -6.3%.
Official figures on Friday showed that Latin America’s largest economy shrank by 1.5% in the first quarter. Anti-coronavirus quarantine and lockdown measures implemented from March onwards will likely result in a much steeper fall in the second quarter.
Economists at Goldman Sachs revised their 2020 GDP outlook to -7.7% after the first quarter figures were released.
The weekly ‘FOCUS’ survey on Monday also showed 2020 inflation expectations declining for a 12th consecutive week, albeit it slightly, to 1.55% from 1.57%. That would also be a historic low, and pave the way for further interest rate cuts.
The central bank’s official inflation goal for this year is still 4.0%.
The central bank is expected to cut its key Selic interest rate by a further 75 basis points this year to a record low 2.25% from 3.0% currently, the survey showed. As the bank itself has indicated, it could deliver a 75 bps cut later this month. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)