Brazil Forecasts Lower GDP Growth, Increased Inflation

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The government of Brazil has reduced its official estimate for the country’s economic growth (GDP) for 2014 and 2015, increased its forecast for the IPCA inflation index (Consumer Price Index) for both years, according to the Ministry of Planning.

“The GDP growth forecasts for 2014 and 2015 have been revised due to the deterioration of the international scenario in the last few months, with lower perspectives of growth of the main global economies,” stated the Ministry’s Assessment of Revenues and Primary Expenditures Report, released on Friday, November 21st.

According to the report, the government has reduced its official estimate for the country’s growth for 2014 from 0.9 percent to 0.5 percent. Despite the decrease in GDP growth estimates, these are still higher than forecasts by financial institutions.

According to the latest Focus Report, a weekly survey conducted by Brazil’s Central Bank market analysts forecast a growth of only 0.21 percent for the Brazilian economy this year. For 2015 official economic growth estimates declined from 3 down to 2 percent, while the market forecasts a growth of 0.8 percent.

In regards to the IPCA index the government’s official inflation forecast for 2014 increased from 6.2 percent to 6.45 percent, very near the target ceiling of 6.5 percent. Financial analysts, on the other hand forecast the index will close the year at 6.4 percent. For 2015 the government’s forecast increased from 5 percent to 6.1 percent, while the market forecasts the index again at 6.4 percent.

According to the report, “the government’s commitment in regards to control of inflation has guided monetary policy decisions, with an increase in the Selic rate which in turn will conduct the IPCA to a lower inflation level in 2015.”