Weekly Report - 30 August 2012 (WR-12-34)

BRAZIL | 2012 forecasts slip again. Real GDP growth forecasts for this year fell to 1.73% from 1.75% previously in the central bank’s latest (27 August) Focus consensus report of local economists, the fourth consecutive downward revision. The central bank, which at the beginning of this year projected real annual growth of 4.5%, has admitted that the final figure will be below 3% this year, but if the private sector forecast proves accurate Brazil would post its lowest growth since 2009, when the economy contracted 0.6%. Last year Brazil grew just 2.7% after recording a real GDP bounce of 7.5% in 2010. Economists have attributed this year’s slowdown to the poor performance of the industrial sector, which has been affected the most by the international economic crisis. According to the Focus report, local economists now expect industrial production to contract by 1.55% in 2012, down from the 1.2% contraction forecasted the previous week and the third consecutive negative revision. This gloom comes despite the intensive efforts of the government led by President Dilma Rousseff to stimulate the industrial sector through a series of measures including cutting tax and labour costs. The 2013 GDP consensus forecast was steady at 4.0%.

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