Loading ...News - Brazil Economy to Grow This Year, Credit Suisse Says
Sept. 14 (Bloomberg) — Brazil’s economy will grow this year and expand at a 5 percent rate in 2010 on increased consumer spending and investments, Credit Suisse Group AG said.
Gross domestic product will expand 0.2 percent in 2009, compared with a previous estimate for a 1 percent contraction, Credit Suisse economists wrote in a note to clients today. The bank raised its growth estimate for next year from 4 percent.
“The higher-than-expected growth in economic activity in Q2 2009 has changed our forecasts for upcoming quarters,” economists led by Sao Paulo-based Nilson Teixeira wrote. “Our expectation of a rebound in GDP growth in 2010 reflects a pickup in household consumption expenditures” and “more importantly, a resumption of the investment cycle.”
Latin America’s biggest economy grew 1.9 percent between April and June, the first expansion in three quarters, the national statistic agency said Sept. 11. The growth was more than the 1.7 percent economists estimated, according to the median forecast of 35 analysts surveyed by Bloomberg.
Rebounding industrial production will likely lead GDP growth this year, Finance Minister Guido Mantega said Sept. 11 after the statistic agency released its data. Investment in Brazil will likely show signs of recovery in the fourth quarter of this year, he told reporters.
Capital formation, which had a “strong contraction” in the fourth quarter of 2008 and the first quarter of this year, was “stable” in the second quarter, the Credit Suisse economists wrote.
Interest Rates
The central bank will likely keep interest rates at a record low 8.75 percent through 2010 as inflation stays “low,” the economists wrote, while also saying prospects for higher rates have increased after the better-than-estimated GDP data.
“Our assessment is that the risks of a stark rise in inflation next year are still relatively low and would not justify the implementation of preemptive monetary tightening,” the economists wrote.
UBS AG said today it expects Brazil’s economy to end 2009 without contracting or expanding. GDP will likely grow 4.5 percent in 2010, up from a previous estimate of 3.7 percent, Claudio Ferraz wrote in a note. Itau Unibanco Holding SA, Brazil’s biggest non-government bank, expects GDP to shrink 0.6 percent this year and grow 4.8 percent in 2010, Chief Economist Ilan Goldfajn wrote in a Sept. 9 note.
Source: Bloomberg.
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