The International Monetary Fund, in its latest global economic outlook, released Tuesday, boosted its projection for economic growth in Brazil, citing rising investment and consumer spending. The IMF now forecasts GDP expansion of 2.3% this year and 2.5% in 2019. In its previous forecast, in January, the IMF was eyeing growth of 1.9% and 2.1% for 2018 and 2019, respectively. The IMF said Brazil’s economic recovery was swifter than expected, partly because of unexpectedly low inflation and partly because of an uptake in private investment. Brazilian inflation is currently running at less than 3.0%. Low inflation has allowed the Brazilian Central Bank to slash interest rates, setting the stage for more consumer buying and more investment by businesses, the IMF said. The government’s program of concessions and privatizations is also attracting private investment.

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Brazilian inflation took another surprising turn in March, with the monthly rate near zero and the annual price spiral declining to a level well below government targets. Monthly inflation in March was 0.09%, down from 0.32% in February, the Brazilian Census Bureau (IBGE) said Tuesday. The 12-month rate declined to 2.68% as of March from 2.84% the previous month. The government’s target for 2018 inflation is a range of 3.0% to 6.0%. With inflation now running consistently below the target range, economists are expecting more cuts to Brazilian interest rates. The country’s base rate is currently 6.5%. In March, fuel prices declined while some services rose. Food and consumer goods prices were broadly stable.

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A top presidential aide and confidant, Wellington Moreira Franco, was named Sunday night to be Brazil’s new Minister of Mines and Energy. President Michel Temer’s office said Moreira Franco, 73, will take over the post from outgoing Minister Fernando Coelho Filho, who will seek election to Congress in October. Moreira Franco will give up his position as a top adviser to Temer, but he will retain his chairmanship of Brazil’s Investment Partnership Program (PPI), which oversees the government’s concessions and privatizations plan. Moreira Franco is a veteran politician, a long-time member of Congress, former Governor of Rio de Janeiro and a member of President Temer’s party, the Brazilian Democratic Movement (MDB). In his dual role as Minister and PPI Chairman, he will preside over auctions of oil-block rights, the partial privatization of utilities holding company Eletrobras and other concessions and privatizations.

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Brazilian industrial output continued its slow but steady recovery from a long recession in February, posting a month-on-month gain of 0.2% and a year-on-year advance of 2.8%, the Brazilian Census Bureau (IBGE) said Tuesday. Growth in production was led by big-ticket items such as motor vehicles, capital goods and electronic devices. Areas such as oil and gas production and mining lagged. Production increased in 14 of the 26 areas surveyed.

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Brazilian President Michel Temer on Wednesday said the U.S. government has temporarily suspended tariff hikes on steel and aluminum from Brazil, pending negotiations. Earlier this month, U.S. President Donald Trump announced tariff hikes for steel and aluminum coming from most nations. The new tariffs will be 25% for steel and 10% for aluminum. Temer said Brazilian officials have been lobbying the U.S. for an exemption, saying Brazilian imports do not harm the U.S. steel industry. The latest contact in the lobbying effort was a meeting earlier this week in Buenos Aires between Brazilian Finance Minister Henrique Meirelles and U.S. Treasury Secretary Steven Mnuchin. Meirelles said, after the meeting, that the U.S. was open to discussions of Brazil ’s appeal on the tariffs. Temer said Wednesday that Brazil will continue to pay tariffs at the old rate, 0.9% for steel and 2% for aluminum, while “new rates are negotiated.” Temer did not offer a timetable on negotiations.

 

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