Market lowers inflation estimate for 2023 to 5.42% and sees higher GDP growth

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Despite the drop, the projection for this year still exceeds the target ceiling set by the government, which is up to 4.75%. Numbers were released by the Central Bank this Monday (12). Economists in the financial market reduced the inflation estimate for this year from 5.69% to 5.42% and also began to predict a greater increase in the Gross Domestic Product (GDP). The information is contained in the “Focus” report, released this Monday (12) by the Central Bank. The survey heard more than 100 financial institutions last week about projections for the economy. The drop in the projection for this year’s inflation happened after the release of the May IPCA, which added up to 0.23%. In twelve months through May, official inflation totaled 3.94%. The numbers came in well below financial market estimates. Even with the retreat in the market’s inflation projection for 2023, it still exceeds the ceiling of the target set by the government, set at 3.25% by the National Monetary Council (CMN). It will be considered formally fulfilled if it fluctuates between 1.75% and 4.75%. Special g1: what is inflation Understand: how inflation affects your pocket If the financial market projection is confirmed, this will be the third year in a row that the inflation target has been exceeded, that is, in which the IPCA is above the fixed ceiling for the government. In 2022, inflation amounted to 5.79%. The higher the inflation, the lower the purchasing power of people, especially those who earn lower wages. This is because the prices of products increase, without wages accompanying this growth. For 2024, the financial market’s inflation projection dropped from 4.12% to 4.04%. The inflation target for next year, defined by the National Monetary Council (CMN), is 3% and will be considered achieved if it oscillates between 1.5% and 4.5%. To define the basic interest rate and try to contain rising prices, the Central Bank is already aiming, at this moment, at the target for next year. This is because changes in the Selic rate take between six and 18 months to have a full impact on the economy. Economy growth For this year’s GDP growth, the financial market projection advanced from 1.68% to 1.84% in the last week. GDP is the sum of all goods and services produced in the country. The indicator serves to measure the evolution of the economy. The increase in the projection of economic growth occurs after the release of the GDP result for the first quarter, which pointed to expansion of 1.9% in comparison with the last three months of last year. The result was above economists’ expectations. As for 2024, the financial market growth forecast fell from 1.28% to 1.27%. Interest rate The financial market maintained its expectations for the economy’s basic interest rate, the Selic, at 12.50% per year for the end of 2023. Currently, the index is at 13.75% per year. For the end of 2024, the market projection for the economy’s basic interest remained stable, at 10% per year. As a result, the market continues to estimate a drop in interest rates next year as well. Other estimates Below are other financial market estimates, according to BC: Dollar: the projection for the exchange rate for the end of 2023 remained at R$ 5.10. By the end of 2024, it rose from R$5.16 to R$5.17. Trade balance: for the trade balance balance (result of total exports minus imports), the projection rose from US$ 58.8 billion to US$ 59.2 billion in surplus in 2023. For 2024, the expectation for the balance Positive continued at $55.3 billion. Foreign investment: the report forecast for the inflow of foreign direct investment in Brazil this year remained at US$ 80 billion inflow. For 2024, the inflow estimate also continued at US$ 80 billion. VIDEOS: economic news

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