Brazil market reduces projections for GDP growth in 2021 from 5.01% to 4.97% – Focus report

RIO DE JANEIRO, BRAZIL – The median of the market’s projections for the growth of the Brazilian economy in 2021 fell again, from 5.01% to 4.97%, in the Focus Report of the Central Bank (BC), released this Monday (25) with estimates collected through the end of last week.

For 2022, the midpoint of the expectations for expanding the Gross Domestic Product (GDP) was reduced from 1.50% to 1.40%.

The Brazilian economy shrank 0.1% in the second quarter, according to the Brazilian Institute of Geography and Statistics (IBGE), at the beginning of September, below the median of estimates collected by Valor Data, of +0.2%. The third-quarter growth will be known on December 2.

The median of the estimates for the dollar at the end of 2021 was raised from R$5.25 to R$5.45. For 2022, the median of the projections also went up, from the same R$5.25 it was the week before to R$5.45.

The median of the National Wide Consumer Price Index (IPCA) projections in 2021 rose for the 29th consecutive week, now from 8.69% to 8.96%. For 2022, it rose for the 14th week in a row, from 4.18% to 4.40%.

For the benchmark interest rate (Selic), the mid-point of expectations also rose, from 8.25% to 8.75% by the end of 2021 and from 8.75% to 9.50% by 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 Selic rate by one 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 one percentage point. Copom said it anticipates another adjustment of 1 percentage point in the next meeting, which takes place this week.