June 3 (Bloomberg) -- Brazil economists cut their 2013 economic growth forecast for the third consecutive week after the central bank accelerated the pace of monetary tightening.
Gross domestic product will expand 2.77 percent this year from the previous week’s forecast of 2.93 percent, according to a May 31 central bank survey of about 100 economists published today. That compares with the central bank’s forecast of 3.1 percent growth. Analysts also cut their 2014 growth outlook to 3.4 percent from 3.5 percent previously.
The slower growth forecast follows a weaker-than-projected GDP expansion in the first quarter and the central bank’s 50 basis point increase of its benchmark Selic rate on May 29. Latin America’s largest economy has been struggling to recover from a two-year slowdown as inflation has helped erode a decade-long consumption boom and manufacturers lost ground to cheaper foreign rivals.
Economists increased their 2013 year-end benchmark interest rate forecast to 8.5 percent from 8.25 percent, as they see policy makers intensifying the monetary tightening cycle. The central bank will hold the rate at 8.5 percent through the end of 2014, the survey showed.
President Dilma Rousseff’s administration is seeking to cool inflation without sacrificing economic growth. Still, analysts today raised their 12-month inflation forecast to 5.67 percent from last week’s 5.66 percent. Consumer prices will increase by 5.8 percent this year from a previous forecast of 5.81 percent.
Brazil’s annual inflation through mid-May reached 6.46 percent. The central bank targets annual inflation at 4.5 percent, plus or minus two percentage points. Economists kept their 2014 inflation forecast at 5.8 percent for 2014.
GDP expanded 0.55 percent in the first quarter, less than the 0.9 percent median forecast in a Bloomberg survey of 45 economists.
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