Brazil analysts raised their 2017 growth outlook for the third straight week while cutting estimates for the key rate at the end of next year after the Senate ousted Dilma Rousseff from the presidency.
Latin America’s largest economy will grow by 1.3 percent next year, compared to a forecast of 1.23 percent expansion the week prior and 1.1 percent a month ago, according to a central bank survey of about 100 analysts published Monday. Economists lowered their year-end 2017 forecasts for the benchmark Selic rate to 11 percent from 11.25 percent a week ago.
Brazil is showing early signs of a recovery after falling into one of its worst recessions on record. Industrial production has expanded for five straight months on the back of both rising business and consumer confidence. Investors are hoping that President Michel Temer will pass reforms to support an economy that over the past two years has been battered by an unprecedented corruption scandal and a crippling political crisis.
Swap rates on the contract maturing in January 2018, a gauge of expectations for interest-rate moves, were unchanged at 12.52 percent at 9:12 a.m. local time in Sao Paulo. The real rose 0.2 percent to 3.2494.
The central bank kept the Selic at a 10-year high of 14.25 percent last week, indicating that borrowing costs will only fall when policy makers are more confident that inflation will hit the 4.5 percent target in 2017. Central bank directors tweaked the language of their post-meeting statement, dropping a sentence that said there was “no room” for monetary easing.
Rousseff was removed from the presidency by a Senate vote on Aug. 31 that put to an end both an almost nine-month impeachment saga and 13 years of leftist Workers’ Party rule.