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Brazil Growth Outlook Worsens

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Brazil’s Finance Minister Henrique Meirelles expects a lower economic growth rate for 2017. He expects the GDP to grow 2% year over year in the fourth quarter compared with the earlier estimate of 2.7%. Therefore, the full-year average is expected to be slightly less than 2%.

Meirelles stated that the lowered outlook is because of the recent political crisis that inundated Brazil. President Michel Temer was accused of accepting bribes from meat-packing company JBS. Earlier this week, corruption charges were brought against him by the prosecutor general of the country.

Adding to the agony, lower tax revenues also led to lower growth forecast. However, Meirelles noted that there are still chances of raising taxes in the country to increase government revenue.

Consumer prices in Brazil rose 3.6% year over year in May 2017 compared with a 4.08% in the previous month. Moreover, the central bank cut its key benchmark rate for the sixth straight time in May. It was reduced by 100 basis points to 10.25%.