Central Bank raises GDP growth forecast to 1.9% in 2024

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Information appears in the inflation report for the first quarter of this year, released by the institution. BC estimated that inflation will reach 3.5% this year, above the central target but within the tolerance range. The Central Bank raised its estimate for Gross Domestic Product (GDP) growth this year from 1.7% to 1.9%. The information is contained in the inflation report for the first quarter, released this Thursday (28). GDP is the sum of all goods and services made in the country, regardless of the nationality of those who produce them, and serves to measure the behavior of the Brazilian economy. “The moderate revision mainly reflects the slightly greater than expected dynamism of the economy at the beginning of the year, as suggested by available indicators”, informed the Central Bank. If GDP grows, it means that the economy is doing well and producing more. If GDP falls, it means the economy is shrinking. In other words, consumption and total investment is lower. However, a rise in GDP does not always equate to social well-being. The increase in projection comes after the announcement that the Brazilian economy grew 2.9% last year. The result was above what was expected by the financial market. As a result, the result for the 2024 GDP estimated by the BC will also represent, if confirmed, a slowdown in relation to last year’s level. With the increase, the BC’s projection for the growth of the Brazilian economy this year became slightly above market expectations – which saw, last week, an increase of 1.85% for GDP in 2024. The Ministry da Fazenda estimated, last week, that the Gross Domestic Product will grow by 2.2% this year. Inflation The Central Bank also maintained its estimate for official inflation, measured by the Broad National Consumer Price Index (IPCA), at 3.5% for 2024. This year’s inflation target is 3%, and will be considered met if it fluctuates between 1.5% and 4.5%. According to the institution, the estimated probability of inflation exceeding the upper limit of this year’s inflation target tolerance range, which is 4.5%, is 19%. For the year 2025, the Central Bank’s inflation estimate remained at 3.2%. For that year, the inflation target is 3%, which may range between 1.5% and 4.5%. And, for 2026, the government estimated that the IPCA, official inflation, would also remain stable at 3.2%. For this year, the inflation target is 3%, which may range between 1.5% and 4.5%. To set the basic interest rate, currently at 10.75% per year, and try to contain the rise in prices, the BC is currently targeting next year’s target, and also 12 months until mid-2025. The higher the inflation, the lower people’s purchasing power, especially those who receive lower salaries. This is because the prices of products increase, without wages keeping up with this growth.

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