Analysts trimmed their Brazilian economic growth and inflation rate forecasts for this year, indicating that the struggling manufacturing sector and the impact of the euro zone debt crisis will keep weighing on economic activity, a central bank weekly survey showed on Monday.
Brazil's gross domestic product is seen expanding 2.53 percent this year, slower than the expansion of 2.7 percent last year and below the 2.72 percent reading for the previous week, according to the median forecast in the survey. The survey's GDP forecast has fallen for a fifth straight week, signaling skepticism that a slew of government steps will help kick-start the struggling economy.
Economists also trimmed their growth estimates for 2013 to 4.30 percent from 4.50 percent the previous week, the Focus survey showed. They also trimmed their estimate of a shortfall in Brazil's current account, the broadest measure of trade in goods and services, indicating that economic activity will continue to falter in the coming quarters.
Beset by fallout from the global downturn, which has sapped demand for commodity exports and discouraged investment by local business and industry, Brazil is struggling to revive an economic boom that led to annual growth of 7.5 percent in 2010 -- the strongest showing of growth in a quarter century. The economy expanded 0.2 percent in the first quarter on a sequential basis.
According to the survey , known as Focus, economists cut their estimate for gains in the benchmark IPCA consumer price index this year to 5.03 percent from 5.15 percent the prior week, the fourth straight decline in forecasts. Estimates for 2013 inflation remained stable at 5.60 percent for a third straight week.
The central bank is targeting inflation of 4.5 percent for this year, plus a leeway of plus or minus two percentage points.
Estimates for the level of the benchmark Selic overnight interest rate stood at 8 percent for a fourth week, the Focus showed. The economists surveyed also expect the Selic, which is currently at a record-low 8.5 percent, to end 2013 at 9 percent.
The Focus polls about 100 financial institutions operating in the Brazilian markets on annual and monthly trends in key indicators from economic growth to inflation and the currency.