MercoPress. South Atlantic News Agency

Brazil central bank survey shows economy forecasted to contract 6,5% this year

The ‘FOCUS’ survey showed 2020 inflation expectations declining for a 13th consecutive week to 1.53% from 1.55%. The central bank’s official goal is 4.0%.

The outlook for Brazil’s economy deteriorated for a 17th week in a row, with Latin America’s largest economy now expected to shrink by 6.5% this year, a central bank survey of economists showed on Monday.

That is closer to recent revised estimates from a clutch of global banks including JP Morgan, UBS, HSBC and Goldman Sachs, for a contraction of 7% or more.

It is down from -6.25% the previous week and now almost two full percentage points below the government’s official forecast of -4.7%, which itself would still be the biggest annual decline in economic output since records began in 1900.

The weekly ‘FOCUS’ survey on Monday also showed 2020 inflation expectations declining for a 13th consecutive week, albeit it slightly, to 1.53% from 1.55%, another historic low and well below the central bank’s official goal of 4.0%.

Among the survey’s other findings, economists significantly revised their current account deficit and foreign direct investment estimates for this year.

They now expected a current account deficit of US$ 20.5 billion, compared with a US$ 28.1 billion deficit last week and a US$ 35.9 billion shortfall a month ago. The average FDI inflow forecast was reduced to US$ 60 billion from US$ 64 billion a week ago, and over US$ 70 billion a month ago.