Central Bank increases Brazilian GDP forecast for 2022

central bank GDP forecast
The Brazilian Central Bank building. Photo: Diego Grandi/Shutterstock

The Brazilian Central Bank bumped its yearly GDP forecast for the country up from 1 to 1.7 percent. The new projection is even more optimistic than the Economy Ministry’s, which sits at 1.5 percent.

Diogo Guillen, the bank’s economic policy director, said Brazil’s surprisingly good Q1 results and positive expectations for Q2 increase the statistical load for this year, even if the economy cools off in the second half of 2022.

However, Mr. Guillen highlighted that if projections for economic activity improve in 2022, the forecasts for 2023 will decline, reflecting hikes to the Selic benchmark interest rate over the last 14 months and the loss of purchasing power of Brazilian families.

According to the Central Bank, economic uncertainty remains higher than usual due to the war in Ukraine and growing risks of a global economic slowdown.

Heightened projections are in line with market movements over recent weeks. 

Financial institutions have increased their expectations for the economy this year, primarily due to the good performance of the services and retail sectors. For 2023, analysts revised their GDP growth projections downward for the same reasons as the Central Bank.