Brazil's central bank improved on Thursday its economic
growth projection for this year while worsening its outlook for
bank lending amid a growing debate on a potential credit crunch
due to high borrowing costs.
In its quarterly inflation report, the central bank forecast a 1.2% GDP expansion in 2023, up from the previously estimated 1.0% in December, still marking a significant slowdown from last year's 2.9% growth.
The bank said that the "moderate revision" reflects
positive surprises in the services sector in the last quarter,
leading to a slightly higher statistical load for the sector in
2023. It added that improved estimates for the extractive
industry and positive first-quarter indicators have also been
considered.
Regarding bank lending, the bank now expects a 7.6% rise in 2023, down from 8.3% in its last report, amid negative surprise data from the previous quarter and "an increase in the expected path for the basic interest rate."
Following the high-profile bankruptcy filing of retailer
Americanas earlier this year, the central bank stated
in the report that non-earmarked credit to companies is now
expected to grow 6% this year from 8% before, "considering the
environment of greater risk aversion in the short term as a
result of specific events related to large companies."
Policymakers
held
the bank's benchmark interest rate at a six-year high of
13.75% for the fifth consecutive time last week, citing concerns
about worsening inflation expectations and reiterating they may
resume hikes if needed. This message was reinforced in the
report.
The hawkish stance has sparked fresh
criticism from new leftist President Luiz Inacio Lula da Silva, who has repeatedly argued that the high level of interest rates is unjustified in light of cooling
inflation
and should instead act as a drag on activity.
(Reporting by Marcela Ayres; Editing by Steven Grattan)
