RIO DE JANEIRO, BRAZIL – The government has increased its projection for economic growth in 2019. The Gross Domestic Product (GDP) estimate was revised from 0.85 to 0.90 percent.
For 2020, the forecast is that the GDP will grow by 2.32 percent, compared to the previous forecast of 2.17 percent. The estimate for the following three years is 2.5 percent.
These estimates are included in the Macrofiscal Bulletin of the Secretariat of Economic Policy (SPE) of the Ministry of Economy, released yesterday, November 7th.
“The improved results of economic activity in the months of July and August and disbursements from the Immediate Withdrawal [of the Guarantee Fund for Time of Service – FGTS] have raised growth estimates for the third and fourth quarter of 2019 to 0.9 percent,” says the bulletin.
“The sharp reduction in future interest rates, the improvement in confidence indicators and the initial effects of the federal government’s structural reforms and privatization tend to positively affect activity for the coming year,” the bulletin said. The secretariat expects “a more vigorous growth of the private sector throughout 2020”.
Inflation
The forecast for annual inflation, measured by the Broad National Consumer Price Index (IPCA), dropped from 3.62 percent in September to 3.26 percent in the bulletin released yesterday. The estimate for the National Consumer Price Index (INPC) declined from 3.67 to 3.26 percent.
“Once again, the intense decline in food prices was the main driver for the drop in the inflation estimate. After the shock of high prices in the first quarter, this trend was reversed throughout the second and third quarters and the food projection for the end of the year becomes lower than four percent,” says the bulletin.
The secretariat further says that “in addition to the household food subgroup, both the inflation for services and industrial goods (which complete the set of free prices) also fall below four percent. The latest data show that the accumulated inflation in 12 months for these sectors remains low and contained”.
Contrary to consumer price indices, the General Price Index – Internal Availability (IGP-DI) was “revised upwards due to the rising trend of wholesale prices”. The forecast for the IGP-DI went from 5.45 to 5.75 percent.
Source: Agência Brasil