Brazil raises 2019 GDP growth forecast slightly to 0.85%, sees inflation falling

Credit: REUTERS/PILAR OLIVARES

Brazil's government marginally raised its 2019 economic growth forecast on Tuesday, saying the worst for the economy is probably behind it, and trimmed its 2019 annual inflation forecast to a new low of 3.6%.

By Marcela Ayres and Jamie McGeever

BRASILIA, Sept 10 (Reuters) - Brazil's government marginally raised its 2019 economic growth forecast on Tuesday, saying the worst for the economy is probably behind it, and trimmed its 2019 annual inflation forecast to a new low of 3.6%.

The Economy Ministry now sees gross domestic product expanding by 0.85% this year, up slightly from 0.81% previously, although the accompanying official document published on Tuesday rounded the new projection down to 0.8%.

That is largely in line with the market consensus view of 0.87% growth, according to the central bank's latest weekly 'FOCUS' survey of economists and financial institutions, but will still be the slowest pace of annual growth since Brazil emerged from recession three years ago.

"The extremely difficult cycle of the Brazilian economy seems to have ended in August," Adolfo Sachsida, economic policy secretary at the Economy Ministry, told reporters in Brasilia.

"From September onwards we will see a more consistent step-by-step recovery," he said, noting, however, that this will be gradual in the face of fiscal and productivity headwinds.

Marcelo Cavalcanti, fiscal policy secretary at the Economy Ministry, told reporters that the actual new projection was 0.85%, not 0.8% as printed in the official release.

The government's new 2019 inflation call of 3.6% is down from 3.8% previously, even further away from the central bank's official forecast of 4.25%.

The new forecasts are the economic parameters that will be used as the basis for the government's upcoming bi-monthly spending review, which is due to be published by Sept. 22.

So far this year, the government has announced spending freezes totaling 34 billion reais ($8.3 billion) to ensure it stays on track to meet its primary deficit target of 139 billion reais.

($1 = 4.09 reais)

(Reporting by Marcela Ayres Writing by Jamie McGeever; Editing by Bernadette Baum)

((jamie.mcgeever@thomsonreuters.com; +55 (0)11 97189 3169; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net))

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