Brazil’s central bank expects the country’s economy will grow by 1.3 percent next year following two consecutive years of contraction, the state-run news agency Xinhua reports.

The quarterly economic projections from the central bank published on Tuesday forecast the economy will shrink by 3.3 percent this year, after a 3.8-percent contraction in 2015.

This year’s rate of inflation will exceed the official target of 6.5 percent, rising as high as 7.3 percent, but the central bank expects the inflation rate will slow to 4.4 percent next year.

Meanwhile, United States credit ratings agency Moody’s says Brazil’s economy is improving.

The agency expects the economy to shrink by 3.5 percent this year before growing by 0.5-percent next year, Xinhua reported.