Brazilian GDP growth projection for 2021 drops from 4.65% to 4.58% -Focus report

RIO DE JANEIRO, BRAZIL – The median of the projections of market economists for the growth of the Brazilian economy in 2021 dropped again, from 4.65% to 4.58%, in the Focus Report, of the Central Bank (BC) this Monday, with estimates collected until the end of last week.

For 2022, the median point of the expectations for expanding the Gross Domestic Product (GDP) remained at 0.50%. By 2024, it remained at 2.00%. By 2023, the median projection fell from 1.90% to 1.85%.

The Brazilian economy shrank 0.1% in the third quarter of the year, in comparison to the second quarter, in the seasonally adjusted series, informed the Brazilian Institute of Geography and Statistics (IBGE) at the beginning of December, 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 data of a decline of 0.1% previously announced.

Analysts consider that, in practice, the economy is stagnant and without prospects for substantial improvement shortly. 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%.

According to the Focus Report on Monday, the median of the projections of market economists for the National Wide Consumer Price Index (IPCA) in 2021 fell from 10.05% to 10.04%. For 2022, the median of the estimates rose from 5.02% to 5.03%; for 2023, it fell from 3.46% to 3.40%; and for 2024, it fell from 3.09% to 3%.

For the introductory interest rate (Selic), the mid-point of the expectations remained at 11.50% in 2022. Estimates were also maintained for 2023 (8%) and 2024 (7%).

The Central Bank’s Monetary Policy Committee (Copom) decided to raise the Selic rate by 1.5 percentage points in the year’s last meeting in early December, from 7.75% to 9.25% per year, the highest level since October 2017.

It was the seventh consecutive hike and was already expected by the market. In the statement, Copom informed that it anticipates another adjustment of the same magnitude in the next meeting, scheduled for February 1 and 2, 2022.

The inflation target pursued by the Central Bank is 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 above or below.

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