BRASÍLIA: Brazil’s central bank cut its 2019 growth forecast for Latin America’s biggest economy on Thursday, after mining giant Vale’s lethal dam collapse pounded output and a drought in key agriculture areas hit harvests.
The commodities-driven economy, which is struggling to recover from a record 2105-2016 recession, is expected to expand by two percent this year, the central bank said, compared with its December forecast of 2.4 percent growth.
The revision puts the central bank in line with market forecasts and could further complicate President Jair Bolsonaro’s efforts to make good on his promised economic reforms.
Bolsonaro was swept to power in last year’s elections on a market-friendly platform, but investors have since grown frustrated at the slow pace of progress in the first three months of his administration.
The far-right leader’s approval rating plunged in March following a series of political scandals.
He is also struggling to push his signature pension reform bill through Congress, triggering political chaos and contributing to recent sharp falls in Brazil’s main stock index.
Industrial production is expected to grow 1.8 percent this year, compared with an earlier forecast of 2.9 percent, the central bank said, largely due to the January 25 dam rupture in southeastern Brazil that killed hundreds of people in one of the country’s worst disasters.
The collapse forced Vale, one of the biggest miners in the world, to suspend production at numerous operations. —AFP