Itau Sees Slower Brazil Growth, Lower Selic This Year and Next
08/21/2012| 12:23pm US/Eastern
SAO PAULO--Brazil's economy will likely expand 1.9% this year, according to leading private lender Itau, down from a previous estimate of 3.1% growth.
Growth will likely rebound in 2013, with gross domestic product expanding 4.5% next year, Itau told reporters in Sao Paulo on Tuesday. Still, that's less than the 5.1% expansion forecast by the bank in May, when it also predicted bigger growth this year.
Brazil's benchmark interest rate will also end the year lower than Itau previously estimated. In May, Brazil's biggest non-government bank expected the Selic to reach 7.75% at the end of this year and rise to 9.5% next year. However, with the outlook for slower growth, Brazil's central bank will likely cut the Selic to 7% this year, and then bring it back up to 8.5% next year.
Inflation next year will also likely be more moderate than previously estimated. The bank expects the IPCA consumer price index to register a 5.3% climb in prices in 2013, down from a previous estimate of 5.7%.
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