MercoPress. South Atlantic News Agency

For the fifth week running Brazil central bank survey reveals increased optimism on the economy

Central bank Focus survey sees GDP falling 5,7% compared to 6,5% last month. Brazil's economy ministry estimate the contraction will be closer minus 4,7%

The gloom surrounding Brazil’s economy lifted for a fifth week in a row, a central bank survey of economists showed on Monday, with the average forecast for 2020 gross domestic product now showing a decline of 5.7%.

That compares with -6.5% a month ago, and while it would still comfortably represent the steepest annual downturn on record, it is the most optimistic outlook since May.

Central bank President Roberto Campos Neto said last month that the bank’s own minus 6.4% GDP call for this year is too pessimistic, and Economy Ministry officials are confident the contraction will be closer to the government’s -4.7% forecast.

The central bank’s latest weekly ‘FOCUS’ survey of around 100 economists also showed 2020 current account deficit projections narrowing for a sixth consecutive week, to US$ 6.2 billion from US$ 8.3 billion. The average forecast in May was for a deficit of almost US$ 40 billion.

Economists maintained their year-end interest rate outlook at 2.00% for the fifth week in a row, the survey showed. The central bank is expected to lower its benchmark Selic rate by 25 basis points to a new low of 2.00% later this week.

The inflation outlook for this year fell slightly to 1.6% from 1.7%. That is well below the central bank’s goal of 4.00%, and also well below the 2.5% lower band of the bank’s target range.