UPDATE 2-Confidence in Brazil's economy fades further
* Economists cut GDP growth view for 7th week
* Consumer confidence down in June, off highs
* 2012 inflation forecast eases below 5 pct
By Silvio Cascione
SAO PAULO, June 25 (Reuters) - Brazilian consumer confidence waned in June and analysts chopped their forecasts for the country's economic growth, as indebted households and risk-wary investors kept a cautious stance despite successive government measures to revive growth.
The FGV consumer confidence index slumped 2.8 percent in June from May, its second straight monthly decline, with households expectations worsening for the economy over the next six months.
Economists cut forecasts for 2012 growth for the seventh straight week in a central bank survey, adding evidence of growing pessimism about once-booming emerging countries.
Economists now see 2.18 percent growth, which would be Brazil's weakest annual economic growth since 2009.
Their forecasts for the expected rebound in 2013 were also cut to 4.20 percent from 4.25 percent seen in the previous week.
FGV's consumer confidence index remained above its historical average as the current economic slowdown have not yet erased record-low unemployment. However, the second decline in a row took it off April's record high.
"Brazil avoided a sharper slump in the 2008's crisis because of its domestic demand. But now we see demand cooling off. The government may have to push harder to boost it," said Felipe Queiroz, an economist at Austin Ratings, in Sao Paulo.
The world's No.6 economy grew a slower-than-expected 0.2 percent in the first quarter of this year from 2011's fourth quarter as businesses, faced with a decline in global demand and higher labor costs, cut back on expansion and investments.
Other large emerging countries are struggling to cope with feeble global demand and heightened uncertainty over the European debt crisis. India is slowing sharply, China cut interest rates to avoid a hard landing, and Russia is being hit by a sharp decline in oil prices.
As it tries to boost growth, Brazil's central bank cut interest rates to an all-time low of 8.5 percent in May and is expected to slash rates to 7.5 percent by year-end as inflation expectations ease, the central bank survey showed.
The outlook for Brazil's benchmark IPCA inflation rate in 2012 eased to 4.95 percent from 5.00 percent a week earlier. In 2013, analysts foresee prices rising 5.50 percent, compared with last week's 5.54 percent prediction.
The survey represents the median forecasts of analysts at about 100 financial institutions.
Besides the rate cuts, President Dilma Rousseff's administration has responded to the economic slowdown by launching more than a half-dozen stimulus packages.
Last month, Brazil's government unveiled a round of tax cuts aimed at boosting the country's weakening automotive sector, and in June it reduced the scope of a financial tax on foreign loans for domestic companies to ease funding conditions.
The central bank targets inflation of 4.5 percent annually, with a tolerance range of plus or minus 2 percentage points.
Consumer prices were seen rising 0.18 percent in June.
- Tweet this
- Share this
- Digg this