In 2024, Brazil’s IPCA inflation is forecasted to stay between 3.5% and 4.2%, potentially below the target ceiling for the second year.
This range is within the set target of 3% with a 1.5% tolerance. Inflation could reach up to 4.5%, but it’s expected to be lower than the 2023 limit of 4.75%.
The financial market predicts a 4.46% inflation rate for 2023, under the target cap. IBGE is set to release the previous year’s data on January 11, 2024.
The IPCA remained at 4.68% in the 12 months leading to November, indicating a drop below the target ceiling.
From 2025, Brazil will aim for a 3% inflation rate with a more flexible timeline for the Central Bank.
In contrast, 2021 and 2022 saw inflation exceed targets, reaching 10.06% and 5.79%, respectively.
Central Bank President Roberto Campos Neto had to explain the overshoots to the National Monetary Council (CMN).
Financial projections for Brazil’s 2024 GDP growth range from 1% to 2.2%, averaging at 1.52%, half of 2023’s expected 3% growth.
The Selic rate is likely to settle at 9% by year-end, according to the Focus Bulletin.
Dollar and Unemployment Trends
The U.S. dollar ended 2023 at R$ 4.85, an 8.06% yearly decline. Financial markets predict a rise by 2024’s end, except Bradesco, foreseeing a drop to R$ 4.70.
Brazil’s unemployment rate fell to 7.5% in late 2023, the lowest since 2015. The country had 8.2 million unemployed, with a record 100.5 million employed.
Unemployment is expected to rise in 2024, potentially reaching 9.3%. Fecomércio SP, however, predicts a continued decline.
Debt, Trade, and Stock Market
Brazil’s gross debt is projected to climb from 74.7% to 80% by year-end. The government is likely to miss its target to eliminate the public accounts deficit in 2024.
Trade balance projections range from a US$ 66.0 billion to US$ 82.5 billion surplus but will likely fall short of 2023’s record.
The Ibovespa index closed 2023 with a 22.28% increase and might end 2024 between 122,000 and 160,000 points.
These economic indicators highlight the complexities of Brazil’s economic landscape and the need for strategic fiscal management.