Brazil Raises Inflation Forecast

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News Americas, SAO PAULO, Brazil, Fri. July 1, 2011: Brazil’s Central Bank this week raised its inflation forecasts for 2011 and 2012.

Policymakers now forecast a 5.8 percent inflation this year and a 4.8 percent inflation next year, compared to the March report’s forecast of 5.6 percent inflation in 2011 and 4.6 percent in 2012.

However, the GDP growth forecast for 2011 remained unchanged at 4.0 percent. The expansion of imports and remittances and the profitability of foreign investments in the Brazilian economy have contributed to current account deficits, which have been partially counterbalanced by favorable terms of trade, the Bank said.

The forecast comes despite signs of “a still uncertain moderation in the pace” of economic activity but the central bank said perspectives for growth remain favorable.
The labor market was also reported as remaining strong, despite incipient signs of moderation.

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