BRASILIA, Feb 13 (Reuters) - The Brazilian government revised its economic outlook on Thursday, lowering its growth forecast for this year to 2.3% due to ongoing monetary tightening. The government also adjusted its inflation projection, anticipating a rise of 4.8%, up from the previous estimate of 3.6% in November, when a 2.5% GDP growth had been forecast.
Secretary of Economic Policy, Guilherme Mello, presented the latest expectations during a press conference, emphasizing that the government's forecast, though more optimistic than the market's, remains realistic. Mello mentioned concerns about U.S. trade policies under President Trump but downplayed the potential macroeconomic impact of recent measures.
The government anticipates inflation exceeding its target of 3% for the second consecutive year, with an expected 4.83% inflation recorded in 2024. Despite a moderated economic growth projection and challenging inflation forecast, government estimates are more positive than those of private-sector economists, who foresee lower GDP growth and higher consumer price increases.
To address rising inflation, the Central Bank raised interest rates to 13.25% and indicated a further increase at the next policy meeting in March. This move is part of a strategy to cool down the economy and manage inflationary pressures.
Recent data, including confidence indicators and job creation figures, suggest a gradual economic slowdown is in progress. Mello highlighted that the economic composition for this year is expected to be less inflation-prone, with the agricultural sector's thriving output likely to mitigate food price hikes.