On the first working day of the year, market projections for Brazilian economic growth in 2022 dropped once again. According to this Monday’s Focus Report — a weekly Central Bank survey of top-rated investment firms — analysts’ estimates for this year’s GDP went from 0.42 to 0.36 percent.
Markets also lowered estimates for last year’s final economic growth figures, down from 4.51 to 4.50 percent. Projections remained at 1.8 and 2 percent for 2023 and 2024, respectively.
The downward revisions came as no surprise. The Brazilian economy entered a technical recession in Q3 2021, after the Brazilian Institute of Geography and Statistics (IBGE) reported that the country’s GDP shrank 0.1 percent in the quarter.
Regarding inflation, analysts reduced expectations for the IPCA consumer price index in 2021 from 10.02 to 10.01 percent, maintaining overall 2022 projections at 5.03 percent.
Analysts expect the Selic benchmark interest rate to hit 11.5 percent by the end of this year, before falling to 8 percent in 2023, and 7 percent in 2024. Last December, the Central Bank’s Monetary Policy Committee hiked interest rates by 1.5 percentage points, and a similar increase is expected for the committee’s next meeting at the beginning of February.