Market analysts once again increased expectations for the Brazilian economy this year. In today’s Focus Report, a Central Bank survey with top-rated investment firms, the median GDP forecast for the year went up from 2.10 to 2.26 percent — the ninth-straight weekly bump.
Optimism has overflowed into expectations for next year, with the median 2023 forecast breaking a negative streak to 0.47 percent. This improved outlook was fueled by the better than expected result of the Brazilian economy which in Q2 grew 1.2 percent compared to the previous three months.
This bump reflected the strong impact of the resumption of on-site economic activities, with the end of pandemic-related restrictions, and government stimulus measures adopted. On the demand side, the expansion was driven by household consumption and investment, and by services and industry on the supply side.
The Q3 GDP reading will come on December 1, and markets expect the pace of economic growth to continue thanks to government stimulus and inflation-taming measures in the last two months.
This week, the market also improved inflation expectations for this year, from 6.70 to 6.61 percent, and for 2023, from 5.30 to 5.27 percent.
However, despite the improvement in the projections for 2022 and 2023, markets began to estimate a worsening in the economic scenario in the medium term, by raising the Selic rate expectation for 2023 — from 11 to 11.25 percent — and slightly bumping 2024’s inflation forecasts – from 3.41 to 3.43 percent.
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