Brazilian market downgrades growth forecast

Source: Xinhua| 2018-06-12 04:20:24|Editor: Mu Xuequan
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BRASILIA, June 11 (Xinhua) -- Brazil's financial market has dropped its prediction for the country's 2018 GDP growth from 2.18 percent to 1.94 percent, the sixth consecutive lowering of expectations, the central bank revealed on Monday.

Every month, the central bank's Focus poll charts the opinion of financial analysts from Brazil's main financial institutions. In May, they had set their GDP expectations at 2.5 percent, indicating a sharp drop in confidence.

This reduction was linked to the impact of the prolonged truckers' strike last month, which paralyzed Brazil for 11 days and provoked a sharp lack of supplies.

For 2019, the analysts maintained their projection of 3-percent GDP growth, while increasing inflation predictions from 3.65 percent to 3.82 percent for 2018 and from 4.01 to 4.07 percent for 2019.

These new inflation expectations remain within the limits of the central bank's target, namely for inflation to reach 4.5 percent, with a margin of error of 1.5 percentage points.

Furthermore, the financial analysts predicted Brazil's basic interest rate, Selic, would stay at its current level of 6.5 percent by the end of the year and reach 8 percent in 2019.

In terms of the exchange rate, those polled said it would remain at 3.5 reals to the U.S. dollars, for the end of 2018 and for 2019.

On the issue of the country's trade balance, the analysts said it would progress from a surplus of 57 billion to 57.15 billion U.S. dollars by the end of the year, and would fall to a surplus of 49.6 billion by the end of 2019.

In a somber note, the analysts also lowered foreign direct investment previsions from 75 to 71 billion U.S. dollars in 2018 and from 80 to 77 billion U.S. dollars in 2019.