Renewable Energy

Brazil government to freeze $1.2 bln, cut growth estimates -sources

Credit: REUTERS/PILAR OLIVARES

The Brazilian government plans to freeze a further 5 billion reais ($1.22 billion) in spending as part of a periodic budget review, two sources said on Monday, adding that official GDP growth estimates will be cut to 1.6% for 2019.

By law, the government must review its accounts every two months, specifying whether it should freeze or proceed with spending to meet its budget targets. The administration's first such report on March 22 called for 30 billion reais ($7.5 billion) of spending initially planned for this year to be postponed.

Brazil is not officially in recession, but with the economy likely having contracted in the first quarter, it may be half way there. Last week, Economy Minister Paulo said he expected 2019 growth of 1.5%, down from a previous forecast of 2.2%.

However, the two sources said it would instead be cut to 1.6%.

Nonetheless, polls suggest the government's projection may be far too optimistic.

Brazil's economy is expected to grow by just 1.24% this year, according to a regular central bank survey published on Monday, the bleakest outlook so far this year. That median forecast was down from 1.45% the week before, and well over a full percentage point down from 2.55% predicted in January.

($1 = 4.0963 reais)

(Writing by Gabriel Stargardter; Editing by Cynthia Osterman)

((Gabriel.Stargardter@thomsonreuters.com; +55 21998116099; Reuters Messaging: gabriel.stargardter.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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