Financial market forecasts Brazil’s GDP at 5.18% and inflation at 6.7% – FOCUS survey

RIO DE JANEIRO, BRAZIL – The financial institutions consulted by the Central Bank (BC) have again raised the forecast for the growth of the Brazilian economy this year, from 5.05% to 5.18%.

For 2022, the expectation for the gross domestic product (GDP) – the sum of all goods and services produced in the country – is 2.10% growth, a percentage slightly lower than the one forecast last week (2.11%).

The financial market kept the projection of GDP expansion for 2023 and 2024 at 2.5%. The estimates are published in the Focus Bulletin of July 5 published in Brasilia, with projections for the main economic indicators.

The financial market forecast for the National Wide Consumer Price Index (IPCA) this year increased from 5.97% to 6.7%. The IPCA is the country’s official inflation rate. The estimate exceeds the upper limit of the inflation target that should be followed by the Central Bank.

The midpoint of the target defined by the National Monetary Council is 3.75%, with a tolerance interval of 1.5 percentage points above or below. In other words, the lower limit is 2.25% and the upper limit is 5.25%.

For 2022, the inflation estimate remains at 3.77%. The projection for 2023 and 2024 is 3.25%.

The financial market expectation for the benchmark interest rate (SELIC) is that it will end the year at 6.50%. The forecast for 2022 is for a Selic of 6.75%. A week ago, the forecast for the same year was 6.5% – the same percentage was forecast for 2023 and 2024.

The Central Bank’s main tool for achieving the inflation target is the SELIC, currently set at 4.25% per year by the Monetary Policy Committee (Copom).

Expectations for the dollar at year-end 2021 fell to R$5.04 from R$5.10 a week ago. For the end of 2022, 2023, and 2024, the forecast for the value of the dollar remains stable at R$5.20; R$5.05; and R$5.00, respectively.