Bank of America Corp raised its forecast for Brazil’s economic growth, citing falling interest rates, a robust labor market and an improving investment climate.
(Bloomberg) — Bank of America Corp raised its forecast for Brazil’s economic growth, citing falling interest rates, a robust labor market and an improving investment climate.
The bank revised its forecast for 2023 gross domestic product growth to 3% from 2.3%, saying that rising welfare payments helped consumers weather steep borrowing costs. Next year, the economy will expand 2.2%, from a previous forecast of 1.8%, it said.
The report is the latest sign of an improving outlook for Latin America’s biggest economy after the central bank started to ease monetary policy this month. The commodities powerhouse beat expectations in the first quarter, helped by a bumper soy harvest.
Brazil’s statistics agency is set to release second quarter GDP data on Friday.
“Contrary to our expectations, economic activity remained resilient,” Bank of America economists David Beker and Natacha Perez wrote in a report released Monday. “The high level of interest rates did not constrain private consumption, likely due to higher government transfers.”
The bank expects low unemployment and interest rates to boost consumption and lift the economy.
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