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Brazil raises growth expectations, lowers inflation projection

Brazil's economy ministry revised its official GDP growth forecast slightly higher, though it also lowered its inflation estimates for the year.

In a report released by the economic policy department on the macroeconomic and fiscal situation in Latin America's largest economy, the ministry tweaked its 2019 economic growth expectations to 0.85% from 0.81%. It moved its inflation estimate for the year to 3.6% from 3.8%.

The slight decrease in the inflation estimate reportedly weighed on the financial sector, with shares of major lenders including Banco Bradesco SA, Itaú Unibanco Holding SA and Banco do Brasil SA all falling by around 2% on Sept. 10.

In his presentation of the report, Economic Policy Secretary Adolfo Sachsida confirmed improved expectations for economic activity as of September, which he attributed to recent interest rate cuts, increased confidence and the availability of resources from the FGTS and PIS/PASEP social security funds.

Sachsida also pointed to productivity, fiscal discipline and an uncertain international outlook as challenges for Brazil as it works to accelerate growth.