Brazilian Market reduces projection for GDP in 2023 from 1.69% to 1.55%

RIO DE JANEIRO, BRAZIL – The median of the projections of the market for the growth of the Brazilian economy next year fell again, now from 1.69% to 1.55%, in the Focus Report of the Brazilian Central Bank (BC), released this Monday, January 31, with estimates collected until the end of last week.

For this year, the midpoint of expectations for expanding the Gross Domestic Product (GDP) was raised from 0.29% to 0.30%. For 2024, it remained at 2.00%.

Since last week, the BC’s weekly bulletin no longer brings the estimates for the 2021 GDP, which should continue to be compiled only in its Expectations System, updated at 9 AM, also on Mondays. The Brazilian Institute of Geography and Statistics (IBGE) should release the official data on March 4.

The median of the projections of market economists for the National Wide Consumer Price Index (IPCA) for 2022 has gone up again, from 5.15% to 5.38%.

For 2023, it also increased, from 3.40% to 3.50%. For 2024, it remained at 3.00%.

For the basic interest rate (Selic), the midpoint of expectations remained at 11.75% for 2022, 8.00% in 2023, and 7.00% in 2024.

The Brazilian official inflation rate was 10.06% in 2021; the IBGE reported earlier this month. It is the highest accumulated annual inflation since 2015 (10.67%), exceeding the target set by the National Monetary Council (CMN) for the Central Bank, of 3.75%, with a tolerance interval of 1.5 percentage points (p.p.).

The Monetary Policy Committee (Copom) raised the Selic rate by 1.5 percentage points in its 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 this week.

The inflation target pursued by the Central Bank is 3.50% in 2022, 3.25% in 2023, and 3.00% in 2024, always with a margin of 1.5 p.p. up or down.

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