BRASILIA: Brazil's economy is expected to grow by less than 1.0pc this year, according to a central bank survey on Monday, as economists cut their forecasts for the 16th week in a row to new lows and dramatically slashed their interest rate outlook.
Reflecting the rapidly deteriorating picture for Latin America's largest economy, economists also cut their 2019 inflation forecast, and lowered their 2020, outlook for growth and official interest rates.
The average forecast for gross domestic product (GDP) growth this year from 78 financial institutions fell to 0.93pc from 1.00pc the week before, the central bank's regular "FOCUS" survey showed. That is a new low, well below the 2.5pc predicted in January, and less than the 1.1pc subdued rate of expansion in 2017 and 2018.
Economists also trimmed their 2020 GDP outlook to a new low of 2.20pc from 2.23pc.
The shift in the interest rate outlook was dramatic. Expectations for the central bank's benchmark Selic rate at the end of the year was slashed to 5.75pc from 6.50pc last week, according to the average outlook of 100 economists.
Similarly, the average year-end projection for 2020 was cut to 6.50pc from 7.00pc. The week before last, it was 7.25pc.
The central bank's rate-setting committee known as 'Copom' meets this week, and while it may be too soon to lower the Selic rate from its current record low of 6.50pc this time around, the pressure on policymakers to ease is building.
The central bank's latest IBC-Br economic activity index showed that economic activity fell again in April, marking the longest stretch of declining activity since the last recession and raising the likelihood that the economy is on its way back there.
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