Financial institutions consulted by the Brazilian Central Bank’s weekly Focus Report have improved their GDP expectations for the ninth straight week, raising their forecast for the year from a -5.46-percent decline to -5.28 percent.
The projections suggest reinforced trust in Brazil’s economic recovery, ahead of the release of Q2 2020 GDP figures on September 1. The data is expected to show the extent of the negative economic impact of Covid-19, with economists expecting a 9.4-percent plunge compared to Q2 2019.
For 2021, financial institutions project growth of 3.5 percent.
The improvement in projections is coupled with a slight increase in consumer inflation index IPCA: economists now see it growing by 1.77 percent this year, versus a 1.71-percent bump a week ago to 3.0 percent in 2021. Despite that, institutions are gambling on the continuity of dovish monetary policy and slashed their benchmark interest rates projection from 3.0 percent to 2.88 percent by the end of 2021.
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