TEXT-Fitch: Brazil economic weakness leads to uncertain recovery

Tue Dec 4, 2012 11:26am EST

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Dec 4 - Brazil's weaker-than-expected third quarter GDP growth of 0.6%
(q-o-q) and 0.9% (y-o-y) has led Fitch Ratings to cut its growth forecast to 1%
from 1.5% for 2012 and to 3.7% from 4.2% for 2013, according to the agency's
most recent Global Economic Outlook (GEO) report published today.

'Tightening of macroeconomic policies in 2011 combined with a fragile external
backdrop and competitiveness related issues have hampered Brazil's economic
recovery process this year, most notably investment which continues to
contract,' said Shelly Shetty, Head of Fitch's Latin America Sovereign Group. 'A
substantial easing of economic policies during 2012, partly reflected in
historically low interest rates, as well as a weaker exchange rate, a slight
recovery in external demand and a pick-up in investment should facilitate a
recovery in 2013, although there is uncertainty regarding its pace and
strength.'

Inflation has been pressured by food prices and persistently high services'
inflation. Tight labor markets have also exerted pressure on wage growth.
Inflation could remain elevated and above the middle point of the inflation
target of 4.5%+/-2% as the economic recovery takes hold in 2013.

Fitch's most recent 'Global Economic Outlook' is available at
'www.fitchratings.com'.

Additional information is available at www.fitchratings.com.
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