Market reduces projection for Brazil 2022 GDP expansion from 0.58% to 0.51% – Focus report

RIO DE JANEIRO, BRAZIL – The median of the market’s projections for the growth of the Brazilian economy in 2021 fell once again, now for the eighth consecutive week, from 4.78% to 4.71%, in the Focus Report, of the Central Bank (BC), released this Monday (06) with estimates collected through the end of last week.

For 2022, the midpoint of expectations for the expansion of the Gross Domestic Product (GDP) was also reduced, from 0.58% to 0.51%. For 2023, it dropped from 2.00% to 1.95%. For 2024, it rose from 2.00% to 2.10%.

The Brazilian economy shrank 0.1% in the third quarter of the year, compared to the second quarter, in the seasonally adjusted series, informed the Brazilian Institute of Geography and Statistics (IBGE) last week, characterizing the entry into a technical recession – two consecutive quarters of contraction -, with the drop of 0.4% in the second quarter in relation to the previous one, a revised number worse than the drop of 0.1% previously disclosed.

Analysts consider that, in practice, the economy is stagnant and without prospects for substantial improvement in the near future. The number was below the median expectations of 46 consulting and financial institutions heard by Valor Data, which was of stability, with a range of projections from -0.6% to +0.3%.

The median of the projections of market economists for the National Wide Consumer Price Index (IPCA) in 2021 rose for the 35th consecutive week, now from 10.15% to 10.18%, according to the Focus report.

For 2022, it also rose, from 5.00% to 5.02%. For 2023, it went from 3.42% to 3.50%. For 2024, it remained at 3.10%.

SELIC

For the basic interest rate (Selic), the midpoint of expectations remains at 9.25% at the end of 2021 and 11.25% for 2022, but moves from 7.75% to 8.00% in 2023, and remains at 7.00% in 2024.

The inflation target pursued by the Central Bank last year was 3.75% in 2021, 3.50% in 2022, 3.25% in 2023, and 3.00% in 2024, always with a tolerance interval of 1.5 percentage points plus or minus.

The Monetary Policy Committee (Copom) raised the basic interest rate by 1.5 percentage points, to 7.75% a year, in its meeting at the end of October. Moreover, it signaled another increase of the same magnitude for the next meeting. Copom is holding the last meeting of the year this week, with the decision on the SELIC rate to be announced late Wednesday afternoon (08).

The median of the estimates for the dollar at the end of this year was raised from R$ 5.50 to R$ 5.56, according to the Report.

For 2022, the median of the projections for the American currency also rose, from R$ 5.50 to R$ 5.55 between one week and another. For 2023, it went from R$ 5.35 to R$ 5.40. For 2024, it remained at R$ 5.30.

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