Brazil financial market raises IPCA projection for 2021 from 8.51% to 8.59% – Focus report

RIO DE JANEIRO, BRAZIL – The Market Report Focus from the Brazilian Central Bank released this morning showed that the median forecast for Brazil’s Gross Domestic Product (GDP) for 2021 was maintained at 5.04%, the exact estimate as four weeks ago. Four weeks ago, it was 1.72%.  2022, the forecast for GDP expansion rose from 1.57% to 1.54%.

The median of the projections of market economists for the National Wide Consumer Price Index (IPCA) in 2021 rose from 8.51% to 8.59%. For 2022, it rose from 4.14% to 4.17%.

Considering only the 28 responses in the last five working days, the estimate for GDP at the end of 2021 rose from 5.09% to 5.01%. For 2022, 28 updates were made in the last five days, with the estimate advancing from 1.55% to 1.49%.

For 2023, the growth projection remained at 2.20%, from 2.30% a month ago. For 2024, the estimate fell from 2.50% to 2.46%, down from 2.50% four weeks ago.

The Central Bank stopped publishing, in the Focus document, the projections for industrial production due to the low number of responses for this indicator.

PRIMARY DEFICIT

The Focus also showed today that the projection for the indicator that measures the ratio between net public sector debt and GDP for 2021 rose from 60.95% to 60.90%. A month ago, it was at 61%. For 2022, expectations rose from 62.95% to 62.80%, compared to 62.60% a month ago.

The report also changed the relationship between the primary deficit and GDP this year, which went from 1.50% to 1.40%. In the case of 2022, the estimate was maintained at 1.00%. A month ago, the percentages were 1.53% and 1.10%, respectively.

According to financial market economists ‘ projections, the ratio between the nominal deficit and GDP in 2021 went from 5.75% to 5.70%. For 2022, it varied from 6.36% to 6.35%. Four weeks ago, these ratios were 6.10% and 6.05%, in that order.

The primary result reflects the balance between government revenues and expenses before interest payments on the public debt. The little consequence, on the other hand, reflects the balance after interest expenses.

TRADE BALANCE

Financial market economists have maintained the projection for the trade balance in 2021 in the Focus survey of a trade surplus of US$70 billion. A month ago, the forecast was for US$71 billion. For 2022, the surplus estimate remained at US$ 63 billion, the same amount forecast one month ago.

Recently, the government lowered the estimate for the trade balance in 2021 from US$105.3 billion to US$70.9 billion. Still, the figure remains 34.3% higher than in 2020.

In the case of the current account of the balance of payments, the forecast contained in the Focus for 2021 went from a deficit of US$2 billion to US$3 billion, down from US$1.58 billion a month earlier.

For 2022, the projection of a deficit in external accounts increased from US$18.55 billion to US$19.5 billion. A month ago, the projected deficit was US$18.1 billion.

For the analysts consulted weekly by the Central Bank, the inflow of Direct Investment in the Country (FDI) will be sufficient to cover the deficit result in these years.

The median forecast for FDI in 2021 went from US$50.5 billion to US$51 billion. A month ago, it was at US$51.15 billion. By 2022, the expectation continued at US$62 billion, from US$60.5 billion a month earlier.