‘GDP Preview’ by the Central Bank is up 2.9% in 2022 and indicates a slowdown in the economy

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IBC-Br numbers, however, do not always match the GDP, which will be released on March 2nd. Deceleration takes place in a scenario of high interest rates to combat inflationary pressures. The Central Bank’s Economic Activity Index (IBC-BR), considered the “preview” of the Gross Domestic Product (GDP), recorded expansion of 2.9% in 2022 compared to the previous year, the institution said on Thursday. (16). As they are equal periods, the result was calculated without seasonal adjustment — which is a type of “compensation” to compare different times of the year. Despite the growth in 2022, the pace of growth slowed down compared to the previous year, when there was a greater expansion: 4.68%. The official GDP result, which is the sum of all goods and services produced in the country, will only be released on March 2 by the Brazilian Institute of Geography and Statistics (IBGE). The market, according to a survey carried out by the Central Bank of more than 100 financial institutions last week, estimates an increase of 3% for the Brazilian economy in 2022. Reasons for the slowdown The drop in the pace of growth of the Brazilian economy took place in a scenario of increase in the basic interest rate to contain inflationary pressures. Last year, in the midst of the presidential election campaign, the Selic, set by the Central Bank, rose from 9.25% to 13.75% a year — the highest level in six years. Concerned about the impact of high interest rates on growth, investments and employment, the level of interest rates is being questioned by the president-elect, Luiz Inácio Lula da Silva. Change in the inflation target will not be discussed by the CMN, says Haddad He has been demanding the president of the BC, Roberto Campos Neto, to reduce the Selic rate. He has also indicated that he may maneuver to change the inflation targets for the coming years, which would allow, in theory, a faster reduction in interest rates in the coming months. Campos Neto, who has a term of office until 2024 in an autonomous BC, however, has warned that an increase in the inflation target, at this moment, could have the opposite effect to the desired one, that is, it would drive prices up even further. It is up to the National Monetary Council (CMN), made up of Campos Neto, the Minister of Finance, Fernando Haddad, and the Minister of Planning, Simone Tebet, to define the inflation targets. Haddad recently informed that the CMN, in a meeting to be held this Thursday (16), should not evaluate a possible revision of the inflation targets. In addition to high interest rates, the population’s high level of indebtedness, and inflation still above the targets set by the government, have also held back a higher level of economic activity. GDP x IBC-Br The IBC-Br results are considered a “GDP preview”. However, they were not always close to official Gross Domestic Product data. The calculation of the two is a little different – ​​the BC 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 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.

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