MercoPress. South Atlantic News Agency

Brazilian economy forecasted to contract 6,25% and rebound 3,5% in 2021

Treasury Secretary Mansueto Almeida said that Brazil will end 2020 with debt equal to 94% of the nation’s GDP, adding that Brazil needs to show it is

Brazil's financial analysts downgraded their economic growth forecast for 2020 from -5.89% to -6.25%, marking the 16th downward adjustment in a row, the Central Bank of Brazil said on Monday.

According to the bank's Focus weekly poll of economists at leading Brazilian financial institutions, analysts maintained their growth projections for 2021 at 3.5%

The inflation forecast for this year slightly decreased from 1.57 to 1.55%, and from 3.14 to 3.1% for next year. Both fall within the government's official inflation target of 4% for 2020 and 3.75% for 2021, with a 1.5-percent variation upwards or downwards.

Brazil's projected benchmark interest rate remained steady at 2.25% for the year, but analysts raised their estimates for next year from 3.29 to 3.38%.

Latin America's largest economy is expected to see a trade surplus of US$ 45.5 billion in 2020, and US$ 45 billion in 2021. Foreign direct investment is forecast to reach US$ 64 billion this year, and US$ 75 billion dollars in 2021.

In related news Treasury Secretary Mansueto Almeida said that Brazil will end 2020 with debt equal to 94% of the nation’s GDP, adding that Brazil needs to show it is committed to additional fiscal reforms for the figure to fall

The government in May revised its official 2020 debt forecast, which is now 93.5% of GDP. But that is based on its assumption that GDP contracts by 4.7%, which is already looking optimistic. But the median estimate according to the Focus economists poll is that the contraction will be of 6.5% contraction.