By Rogerio Jelmayer

SAO PAULO--Economists raised their 2017 inflation outlook for Brazil, as they expect the central bank to reduce its benchmark interest rate against the backdrop of a struggling domestic economy.

Brazil's inflation rate, measured by the official consumer price index, is expected to end this year at 4.87%, according to a weekly central-bank survey of 100 economists, compared with the 4.85% forecast in last week's survey.

In 2016, the rate of inflation ended at a projected level of 6.38%, the survey showed.

Brazil's gross domestic product is expected to expand 0.50% in 2017, compared with a projected contraction of 3.49% in 2016, according to the survey.

Economists reduced their outlook for the 2017year-end benchmark interest rate, or Selic, to 10.25% from 10.50% in the prior week's survey. Currently, the Selic is at 13.75%.

They also forecast Brazil to post a $46.98 billion trade surplus this year, up from the $46.85 billion expected in the previous week's survey.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com

(END) Dow Jones Newswires

January 02, 2017 06:03 ET (11:03 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.