December 19, 2019 / 12:46 PM / a month ago

Brazil raises 2020 GDP growth forecast, inflation seen stable

FILE PHOTO: Brazil's President Jair Bolsonaro looks on near Brazil's Economy Minister Paulo Guedes during a meeting with businessmen at the National Confederation of Industry (CNI) in Brasilia, Brazil December 11, 2019. REUTERS/Adriano Machado

BRASILIA (Reuters) - Brazil’s central bank on Thursday raised its 2020 gross domestic product growth forecast to 2.2% in its quarterly inflation report from 1.8% previously, but cautioned it was conditional on continued progress on economic reforms.

The bank also increased its forecast for 2019 economic growth to 1.2% from 0.9% previously.

Brazil has struggled to recover from a deep recession despite government passage of a landmark overhaul of the pension system, with South America’s largest economy under pressure from broader regional instability.

“The current stage of the economic cycle calls for caution in monetary policy,” the inflation report said.

The bank held the inflation outlook stable with a forecast of 3.5% inflation for 2020 and 3.4% for 2021 based on the market outlook for interest rates and the foreign exchange.

Reporting by Marcela Ayers and Jake Spring; editing by Jason Neely and Steve Orlofsky

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