SAO PAULO – Analysts revised on Monday their 2019 gross domestic product (GDP) forecasts for Brazil downward from 1.71 percent to 1.49 percent due to the slow recovery in Latin America’s largest economy.
The GDP estimates come from the Boletin Focus, a weekly Central Bank survey of analysts from more than 100 private financial institutions on the state of the national economy.
This is the tenth downward GDP revision by private-sector analysts for Brazil, whose economy grew an anemic 1.1 percent in both 2017 and 2018 after going through a severe two-year recession.
The cut in analysts’ GDP forecasts comes just days after a government agency reported that industrial production fell 2.2 percent in the first quarter, compared to the same period in 2018.
The Brazilian Institute of Geography and Statistics (IBGE) said in a report that the industrial sector had been affected by the halt to mining operations ordered in the wake of the accident at the Brumadinho mine in southeastern Brazil.
The collapse on Jan. 25 of a tailings dam at Vale’s Brumadinho mine killed 235 people, left 35 others missing and paralyzed iron ore production in Brazil, one of the world’s leading sources of the mineral, causing a spike in prices on international commodities markets.
Analysts are still optimistic about a recovery, leaving their forecast of 2.5 percent growth in 2020 unchanged, even though that number is lower than it was four weeks, when it was at 2.70 percent.
Brazil’s economy contracted by 3.5 percent in 2015, the worst performance in 25 years, and another 3.5 percent in 2016, marking the first time since 1931 that the GDP fell for two consecutive years.
Even though the economy has recovered, some 13 million people are still unemployed.
The unemployment rate dipped slightly from 13.1 percent in the first quarter of 2018 to 12.7 percent in the same period this year, but the underemployment rate, which includes those working in the informal sector and workers who wish to and are willing to work more hours but are unable to do so, reached a record level.
President Jair Bolsonaro’s administration is pushing for the approval of pension and retirement system reforms to stabilize the economy, which is bearing the burden of a high budget deficit and a growing national debt.