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Brazil Economists Cut 2012 Growth Forecast for Eighth Week

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July 2 (Bloomberg) -- Analysts covering the Brazilian economy cut their growth forecast for the eighth straight week even as the government steps up efforts to bolster a recovery.

The world’s sixth-largest economy will grow 2.05 in 2012, according to the median estimate in a central bank survey of about 100 analysts published today. A week earlier, analysts forecast growth of 2.18 percent.

Consumer prices will rise 4.93 percent in 2012, down from 4.95 percent in the previous week’s survey. Over the next 12 months inflation will reach 5.5 percent, up from 5.48 percent in the June 22 survey.

The government last week stepped up government equipment purchases by 6.6 billion reais and increased crop financing by 14.8 billion reais, the latest in a series of measures including tax breaks on industrial and consumer goods to help stimulate demand.

Brazil’s economy expanded 2.7 percent in 2011, down from 7.5 percent in 2010.

Brazil’s economy grew by a lower-than-expected 0.8 percent in the first quarter from a year earlier, as manufacturers lost ground to foreign competitors and indebted consumers showed signs of easing demand. Last week, the central bank lowered its growth forecast for this year to 2.5 percent, from 3.5 percent.

The central bank has lowered its benchmark Selic rate by 400 basis points since August to 8.5 percent. Economists maintained their call for policy makers to cut the rate to 7.5 percent this year, the survey showed. The bank targets inflation of 4.5 percent, plus or minus two percentage points.

To contact the reporter on this story: Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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