JPMorgan Chase & Co and Barclays became the latest financial institutions to lower their estimates for Brazil’s economic growth this year, on the back of weak activity data and increased political uncertainty.
They joined Itau Unibanco SA, Latin America’s largest bank by market value, which remains the most pessimistic of the three after cutting its 2019 growth forecast for Brazil to 1.3% last Friday.
“Although we continue to expect pension reform to be approved eventually later this year, we see growing risks of delays and further dilution,” Barclays’s economist Roberto Secemski wrote in a report on Monday.
“As such, the expected acceleration in investment could be even more back-loaded, with a positive effect on employment and income growth becoming more visible only later this year and in 2020.”
Barclays sees Brazil’s gross domestic product expanding 1.7% this year, versus 2.2% previously. JPMorgan reduced its 2019 GDP forecast to 1.5% from 2.1%, saying that activity hasn’t performed well in the first quarter and that rising political uncertainty is weighing on sentiment.
“The rise of political uncertainty will continue to take a toll on business sentiment,” JP Morgan’s economist Cassiana Fernandez said.