Barclays the latest bank to lower Brazil GDP forecasts



BRASILIA (Reuters) – Economists at Barclays (LON:) have cut their Brazilian growth forecasts, the latest in an expanding clutch of observers to say the spillover from disappointing data late last year means growth this year will now be barely above 2%.

They now expect gross domestic product to grow by 2.1% this year, down from their previous forecast of 2.3%, and they also trimmed their 2019 GDP growth forecast to 1.1% from 1.2%.

The magnitude of the changes may not be huge, but the direction of travel is significant. Economy Minister Paulo Guedes has been vocal in championing growth of up to 2.5% this year, so barely more than 2% would be deeply disappointing.

Industrial production, retail sales, and international trade are all weighing on the outlook for this year, and that’s not even taking into account the fallout from the coronavirus outbreak in China, Brazil’s largest trading partner.

Central bank president Roberto Campos Neto said last week that economists reckon the hit to 2020 growth from the coronavirus could be up to 0.4 percentage point.

Economists at Swiss investment bank UBS recently lowered their 2020 GDP forecast to 2.1% from 2.5%, citing the softer data and coronavirus impact, and cut their 2021 forecast to 2.5% from 2.8%.

Deutsche Bank (DE:) strategists note Brazil’s “elusive growth acceleration”, and Citi economists say there are downside risks to the market’s broad 2020 consensus call of around 2.3% growth.

Treasury Secretary Mansueto Almeida told Reuters in an interview last week that some economic figures lately have been “very strange”, and said the government was sticking with its 2020 GDP growth forecast of 2.4% “for now”.

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