Market starts to see lower GDP and even higher inflation by year-end 2021 – Focus report

RIO DE JANEIRO, BRAZIL – The median of the market projections for the growth of the Brazilian economy in 2021 fell from 5.22% to 5.15%, in the Focus Bulletin, of the Central Bank (BC), released this Monday 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 2.00% to 1.93%.

Last week, the Brazilian Institute of Geography and Statistics (IBGE) informed that the GDP decreased 0.1% in the second quarter of the year, over the first. The performance frustrated the market median, which had expected an advance of 0.2% in the period.

INFLATION

The median projection of market economists for the Broad National Consumer Price Index (IPCA) in 2021 rose from 7.27% to 7.58%. By 2022, it rose from 3.95% to 3.98%.

The inflation target to be pursued by the Central Bank is 3.75% in 2021 and 3.50% in 2022, always with a tolerance interval of 1.5 percentage points plus or minus.

For the basic interest rate (SELIC), the midpoint of expectations rose from 7.50% to 7.63% at the end of 2021 and from 7.50% to 7.75% in 2022.

In the meeting held in early August, the Monetary Policy Committee (Copom) raised the Selic rate from 4.25% to 5.25% per year, in line with what was expected by the market, and further increases are widely expected soon.

DOLLAR

The median of the estimates for the dollar at the end of this year was raised from R$5.15 to R$5.17. For 2022, the median of the projections was maintained at R$5.20 between one week and the next.

Since the penultimate week in January, the Focus bulletin no longer brings the economists who most correct forecasts, the so-called Top 5, which are now disclosed by the Central Bank only through the Market Expectations System, whose updates are also carried out on Mondays at 9 AM.

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