Economy retreated 2% in May, indicates ‘preview’ of the Central Bank’s GDP
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Fall in the indicator comes after rise in April. In the partial year, IBC-Br indicates advance of 3.61%, and in the accumulated of 12 months until May, increase of 3.43%. The Central Bank’s Economic Activity Index (IBC-Br), considered the “preview” of the Gross Domestic Product (GDP), recorded a 2% decline in May compared to April, the BC said this Monday (17). The result was calculated after seasonal adjustment – a type of “offset” to compare different periods. This is the biggest drop in the IBC-Br since March 2021, when a 3.6% drop was recorded. The BC discloses only the data, without indicating motivations or analyzing the index. In April, the preview of the GDP had indicated a growth of 0.56% in the economy. In comparison with May of last year, informed the Central Bank, the indicator of the level of activity registered growth of 2.15%. In the accumulated result for the first five months of this year, the IBC-Br increased by 3.61% and, in the twelve months through April, grew by 3.43%. In this case, the index was calculated without seasonal adjustment. GDP x IBC-Br GDP is the sum of all goods and services produced in the country and serves to measure the evolution of the economy. The indicator incorporates estimates for agriculture, industry and the service sector, in addition to taxes, but does not consider the demand side (incorporated in the IBGE GDP calculation). The BC’s IBC-Br is an index created to try to anticipate the GDP result, but the results were not always close to the official data released by the IBGE. The IBC-Br is one of the tools used by the BC to define the country’s basic interest rate. With lower economic growth, for example, theoretically there would be less inflationary pressure. In June, the rate was maintained at 13.75% per annum, the highest level in six and a half years, in an attempt to contain price increases.
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