Market reduces inflation estimate to 5.80% this year 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 (22). Financial market economists reduced the inflation estimate for 2023 from 6.03% to 5.80%, at the same time that they began to project greater growth in the level of activity. The information is contained in the “Focus” report, released this Monday (22) by the Central Bank. The survey heard more than 100 financial institutions last week about projections for the economy. Even with the drop in the market’s inflation estimate for 2023, it still exceeds the ceiling of the inflation target set by the government. The central target was set at 3.25% by the National Monetary Council (CMN) and will be considered formally met 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 by the target system. In 2022, inflation amounted to 5.79%. The higher the inflation, the lower the purchasing power of people, especially those earning 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 4.15% to 4.13%. 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. GDP For Gross Domestic Product (GDP) growth in 2023, financial market expectations rose from 1.02% to 1.20% in the last week. The increase happened after the release of the so-called “preview” of GDP by the Central Bank last week, which pointed to a rise of 2.40% for the level of activity in the first quarter of this year. GDP is the sum of all goods and services produced in the country. The indicator serves to measure the evolution of the economy. As for 2024, the growth forecast dropped from 1.38% to 1.30%. In early March, the Brazilian Institute of Geography and Statistics (IBGE) reported that GDP increased by 2.9% in 2022, against an increase of 5% in the previous year. In March, the Ministry of Finance estimated a GDP expansion of 1.61% for 2023 and 2.34% for next year. Interest rate The financial market maintained its expectations for the economy’s basic interest rate, the Selic, at 12.50% per year by 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 See below other financial market estimates, according to BC: Dollar: the projection for the exchange rate for the end of 2023 dropped from R$ 5.20 to R$ 5.15. By the end of 2024, it remained at R$5.20. Trade balance: for the trade balance balance (result of total exports minus imports), the projection remained at US$ 60 billion in surplus in 2023. For 2024, the expectation for the positive balance decreased from US$ 54.8 billion to $54.6 billion. Foreign investment: the report forecast for the inflow of foreign direct investment in Brazil this year remained at US$ 80 billion inflow. For 2024, the inflow estimate also continued at US$ 80 billion. VIDEOS: economic news

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