By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – Brazil’s Central Bank delivered more negative economic news on Wednesday (June 24th), increasing its inflation forecast and estimating a greater decline in the country’s GDP for this year. According to the Quarterly Inflation Report inflation should rise to nine percent this year in Brazil, from the 7.9 percent forecast in March, while the GDP should register a contraction of 1.1 percent.
In March the forecast for the GDP had only foreseen a contraction of 0.5 percent. With little chance of a significant improvement this year Central Bank officials say the government is now concentrating on lowering inflation rates next year.
“At the moment our work is 200 percent focused on our objective of bringing inflation to 4.5 percent at the end of 2016,” said Central Bank’s Economic Policy Director Luiz Awazu Pereira da Silva during the press conference to announce the quarterly forecasts. The Central Bank is forecasting 2016 inflation at 4.8 percent, a little over the newly set target.
According to the report although industrial production and the services sector have contraction forecasts this year, the agribusiness sector is expected to grow by 1.9 percent, a better forecast than the one percent estimated in the previous quarterly report.
Industry is expected to decrease by three percent while services is expected to shrink by 0.8 percent. In the March quarterly report industry’s contraction was forecast at 2.3 percent while officials estimated that the services sector would grow by 0.1 percent.
The rising inflation and country’s deteriorating economic situation has also led unemployment rate to its highest for the month since May 2011. The IBGE (Brazilian Statistics Bureau) released the number of unemployment persons in the six main metropolitan regions of the country in May 2015 on Wednesday, showing an unemployment rate of 6.7 percent. In April the unemployment rate was of 6.4 percent and in May of 2014 4.9 percent.