July 16, 2020 / 6:47 PM / 25 days ago

Brazil central bank chief says V-shaped recovery may not last

FILE PHOTO: Brazil's Central Bank President Roberto Campos Neto gestures during a news conference at the Brazil Central Bank headquarters in Brasilia, Brazil January 9, 2020. REUTERS/Adriano Machado

BRASILIA (Reuters) - Brazilian Central Bank President Roberto Campos Neto said on Thursday that the country’s economic recovery so far has been V-shaped, although he expects the pace of growth to slow down from now on.

“The question now is, how soft will the second part of the recovery be,” Campos Neto said, speaking in a webcast organized by Itau Unibanco.

Campos Neto said the official expectation is for Brazil’s economy to contract 6.4% this year, but that the outlook seems to be improving. He did not commit to making a revision to his forecast.

Like many other countries around the world, Brazil’s economy has been crushed by the novel coronavirus pandemic.

Campos Neto also noted it is unlikely that Brazil will be close to desired inflation targets until 2022, due to the deflationary consequences of the economic recession caused by the coronavirus.

The central bank’s target for 2020 is 4% inflation, for 2021 it is 3.75% and for 2022 it is 3.5%, with an acceptable margin of 1.5 percentage points up or down in both cases.

Campos Neto said consumption spending is likely to grow in coming weeks as emergency aid payments are scheduled to last until November and more credit programs targeting small and mid-sized companies are launched.

Reporting by Marcela Ayres; editing by Jonathan Oatis

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