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Brazil central bank cuts GDP growth forecast to 2.3%

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(Globalpost/GlobalPost)

Brazil's Central Bank revised its forecast for the country's 2013 GDP growth down from 2.5 percent to 2.3 percent in its latest inflation report released Friday.

The revision coincides with expectations from market analysts who on Monday also predicted 2.3 percent expansion this year.

It marked the third time the bank revised its growth forecast for 2013. In March, it predicted 3.1 percent, then in June revised it downward to 2.7 percent and down to 2.5 percent in September.

Last year, the economy expanded a paltry one percent after 2.7 percent in 2011 and a sizzling 7.5 percent in 2010.

To stimulate the economy, the government has, since 2011, cut taxes on cars and home appliances and the central bank has slashed its base rate down to 7.5 percent.

But this year, to rein in inflation, the bank had to resort to six consecutive hikes of the base rate, which now stands at 10 percent.

Domestic consumption is expected to continue rising, albeit at a lower pace, and there is optimism due to the low jobless rate, which in November fell to a record low of 4.6 percent, the report said.

The bank stuck to its forecast of 5.8 percent inflation for 2013, above its official target of 4.5 percent.

Next year, the bank is predicting 5.6 percent inflation and 5.4 percent in 2015.

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http://www.globalpost.com/dispatch/news/afp/131220/brazil-central-bank-cuts-gdp-growth-forecast-23