Brazil industry group cuts 2013 growth forecast

Brazil's main industrial lobby group on Thursday cut its forecast for GDP growth to two percent and that of the industrial sector to one percent, in a gloomy assessment of Latin America's biggest economy. The GDP projection was cut from 3.2 percent in March to two percent, and industrial output growth from 2.6 percent to one percent, the National Confederation of Industry (CNI) said in its quarterly report. Brazil's industrial production has been hard hit by declining competitiveness and investments. CNI also projected inflation of six percent this year, well above the official target of 4.5 percent. And it cut from 3.5 percent to 2.3 percent projected growth of private domestic consumption, the engine of Brazil's economic expansion, as "the weak economic activity is reflected in the labor market, which is not creating jobs at the pace of the past two years." Two years of low growth and high inflation have dented the popularity of President Dilma Rousseff as have three weeks of nationwide street protests by angry Brazilians demanding better public services and an end to corruption. Brazil's industrial production contracted 0.8 percent in 2012 and there had been hopes of a rebound this year on the back of strong government incentives. Meanwhile the country's GDP expanded a paltry 0.9 percent last year, after 2.7 percent in 2011 and a sizzling 7.5 percent in 2010. The Central Bank also projected lower GDP growth of 2.7 percent this year and inflation of six percent.