(Bloomberg) -- Brazil’s government raised its 2024 growth and inflation forecasts days ahead of a key central bank meeting.
The economy is now expected to grow 3.2% this year, the Finance Ministry said Friday, from a previous estimate 2.5%.
Growth is then expected to cool to 2.5% in 2025, little changed from its previous forecast of 2.6%, the ministry said in its report.
The government also also lifted its 2024 inflation forecast to 4.25% from 3.9%, in part due to unfavorable weather and a weaker real. This will slow to 3.4% next year, it added, from a previous expectation of 3.3%.
“The increase in the frequency of extreme events, such as hurricanes, floods and droughts, have been causing damage to economies and putting pressure on inflation in different countries,” the ministry said.
The central bank is expected to raise its key interest rate for the first time in two years when it meets next week, to 10.75% from 10.5%. Brazil is out of step with other major Latin American economies, including Peru, Colombia and Mexico, which have cut rates at recent meetings.
Analysts surveyed by Brazil’s central bank expect further increases after that, to take the benchmark rate to 11.25% by December. Board members have said they will do “whatever it takes” to tame price growth.
Finance Minister Fernando Haddad, said this week that some businesses are now suffering from a shortage of workers as strong growth tightens the labor market.
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