Markets improve GDP forecast but raise inflation concerns

inflation food
Food products are getting more and more expensive in Brazil. Photo: Hristina Satalova/Shutterstock

According to the Brazilian Central Bank’s Focus Report — a weekly survey of top-rated investment firms — the median forecast for the country’s 2021 GDP growth rose from 3.45 to 3.52 percent. Meanwhile, markets slightly lowered their expectations for 2022, from 2.38 to 2.3 percent.

Financial markets raised 2021 inflation projections for the seventh consecutive week, up to 5.24 percent — just below the 5.25-percent upper limit of the government’s target band. Last week, the median forecast sat at 5.15 percent.

Brazil’s consumer price index IPCA rose 0.31 percent in April, in line with market estimates. Data shows that inflation is beginning to ease off after a reduction in fuel prices. However, 12-month inflation reached 6.7 percent, breaching the upper limit of the government’s 5.25-percent target.