Brazil’s Finance Ministry revises up GDP projections for 2023

Brazil’s finance minister, Fernando Haddad, has told journalists the economic projections that the Secretariat for Economic Policy (SPE) will release next week in its macro-fiscal bulletin. According to him, the government expects Brazil’s GDP to grow by 1.9 percent this year, higher than the 1.6 percent forecast in the March bulletin, but lower than the last prediction by the Jair Bolsonaro government, which was 2.1 percent.

According to Mr. Haddad, the first quarter was “relatively good, it surprised economists,” and Brazil is “in a position to end the year [growing] at around 1.8-2.0 percent.”

The government’s inflation estimate rose slightly, from 5.3 percent to 5.6 percent. “Our inflation forecast is lower than the market,” pondered the cabinet minister.

In the latest edition of the Central Bank’s weekly Focus Report, a survey of more than 140 leading financial institutions, inflation forecasts for this year rose slightly to 6.03 percent and for 2024 fell from 4.16 to 4.15 percent. The inflation target is currently set at 3.25 percent, with a 1.5 percent tolerance band.

The Brazilian market’s expectations for the country’s GDP are much less optimistic: 1.02 percent for 2023 and 1.38 percent for 2024.

Last month, the Central Bank also raised its forecast for Brazil’s economic growth this year from 1 percent to 1.2 percent. At the time, the monetary authority said the revision reflected “positive surprises in some components of the services sector in the fourth quarter of 2022,” which had a carry-over effect on some of the main economic indicators in the first two months of 2023, as well as an improvement in the projections for the country’s extractive industries.

Even the Central Bank’s view is more optimistic than that of the world’s leading banks and lenders. The International Monetary Fund also sees the country’s GDP growing only 0.9 percent this year, while the World Bank estimates 0 percent growth in 2022.

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