SAO PAULO 

Brazil's economy is now predicted to shrink 1 percent this year, according to the latest central bank survey of economists released Monday.

It is the thirteenth consecutive cut in GDP predictions by the Focus survey of more that 100 economic institutions, and the steepest since early February. Last week the forecast for 2015 was for a contraction of 0.83 percent.

Official growth figures released last week confirmed the economy had inched up 0.1 percent in 2014, defying economists' predictions of negative growth.

Finance Minister Joaquim Levy previously said ongoing fiscal adjustments, which have included cuts to government spending and various tax hikes, would bring improvements to the country's stalling economy, but only after a short period in which conditions would worsen.

The survey predicted the economy would return to growth in 2016, but the outlook was cut from 1.20 percent to 1.05 percent.

The economists surveyed also expected the government to continue with its cycle of increases to Brazil's key interest rate, the SELIC, in a bid to curb over-target inflation. The rate, which currently stands at 12.75 percent, will be raised to 13.25 percent by year's end, economists predict.

Inflation is also forecast to top 8.13 percent this year -- significantly above the 4.5 percent central target set by the government, which has a tolerance band of 2 percentage points above or below the target. 

In the 12 months to mid-March, inflation measured by the broad consumer index (IPCA-15) reached 7.9 percent, it was recently revealed. But prices are expected to grow more slowly next year, with inflation set to come back into the target range.

Economists say that prices have been pushed by a recent strengthening of the U.S. dollar, which has surged against the Brazilian real. Increases to government-administered prices, such as water, energy, transport and fuel, have also significantly contributed to the rise.

After recently recovering modestly against the dollar, the real lost value again Monday when markets opened -- the dollar bought 3.28 reais just after 9 a.m. in São Paulo (GMT1300). A week ago, the dollar was trading at 3.13 reais. Economists expect the dollar to remain strong against the Brazilian currency, predicting a year-end quote of 3.23 reais.