Brazil 2022 GDP growth is now expected at 2.7%, up from 2% -Ministry of Economy

Brazil 2022 GDP growth is now expected at 2.7%, up from 2% -Ministry of Economy

BRAZIL (Reuters) – Brazil’s Economy Ministry on Thursday raised its forecast for economic growth this year to 2.7 percent from the 2 percent forecast in July after official data for the second quarter showed brisk activity.

The ministry’s Economic Policy Secretariat said the upbeat revision comes after GDP growth between April and June surprised expectations for a 1.2% rise. It added that activity will continue to grow in the second half, albeit at a slower rate.

“The first releases for the month of July indicate continued growth in industry, services and the labor market. The confidence chain confirms the positive expectations for the third quarter with a broad expansion in various sectors,” the secretariat said in a statement.

The ministry kept its GDP growth forecast at 2.5% for 2023.

Private economists estimate that Latin America’s largest economy will expand by 2.39% this year and just 0.5% next year, weighed down by the central bank’s sharp monetary tightening to tame inflation.

Policymakers have already pushed interest rates to 13.75% from a record low of 2% in March last year.

But the ministry stressed again that its more optimistic prospects for 2023 are backed by greater private investment and historically high capital goods imports relative to GDP.

The secretariat added that despite the expected moderate slowdown in global growth, Brazil sees more jobs in the formal sector and increased services with increased productivity.

The ministry lowered its inflation forecast for 2022 to 6.3 percent from 7.2 percent in July. For 2023, it was maintained at 4.5%.

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