Brazil market projects lower GDP expansion in 2021 and 2022 – Focus report

RIO DE JANEIRO BRAZIL – The median of the market projections for the growth of the Brazilian economy in 2021 went from 5.04% to 5.01% in the Focus Report of the Central Bank (BC), released on Monday (18) with estimates collected through the end of last week.

For 2022, the mid-point of the expectations for expanding the Gross Domestic Product (GDP) was reduced from 1.54% to 1.50%.

The Brazilian economy shrank 0.1% in the second quarter, according to the Brazilian Institute of Geography and Statistics (IBGE), in early September.

The median of the estimates collected by Valor Data from 61 consulting and financial institutions pointed to an increase of 0.2% in the period, with a range of projections between a decrease of 0.3% and an increase of 0.8%.

The median of the projections of market economists for the Broad National Consumer Price Index (IPCA) in 2021 rose from 8.59% to 8.69%. For 2022, there was also a slight increase, from 4.17% to 4.18%.

For the basic interest rate (Selic), the mid-point of the expectations remained at 8.25% at the end of 2021 and 8.75% for 2022. The inflation target pursued by the Central Bank is 3.75% in 2021 and 3.50% in 2022, with a tolerance interval of 1.5 percentage points above or below.

The Monetary Policy Committee (Copom) raised the basic interest rate by 1 percentage point (p.p.) to 6.25% p.a. in the September meeting, as expected by most of the market. It was the fifth straight increase and the second consecutive 1 percentage point. Copom stated that it foresees another adjustment of 1 percentage point in the next meeting.

In the case of the exchange rate, the median estimate for the dollar at the end of this year was maintained at R$5.25. For 2022, the median point of the projections also remained at R$5.25 from one week to the next.

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