Economic activity is practically stable in January this year

Brazilian economic activity was practically stable in January this year, according to data released this Monday (17th) by the Central Bank (BC). The Central Bank Economic Activity Index (IBC-Br) showed a negative change of 0.04% in January compared to December 2022, according to seasonally adjusted data (adjusted for the period).

The IBC-Br is a way of evaluating the evolution of the country’s economic activity and helps the body to make decisions about the basic interest rate, the Selic, currently set at 13.75% per year. The index incorporates information on the activity level of sectors of the economy – industry, commerce and services and agriculture –, in addition to the volume of taxes.

Since August last year, the IBC-Br has been falling. In December, there was an increase and, now, stability. The results are in line with BC’s decision to maintain the Selic rate. The rate has been at 13.75% since August last year and is the highest level since January 2017, when it was also at that level.

When the Copom raises the basic interest rate, the purpose is to contain heated demand, and this affects prices because higher interest rates make credit more expensive and stimulate savings. Thus, higher rates help to reduce inflation, but can also hinder the expansion of the economy.

Accumulated result

In January, the IBC-Br reached 142.28 points. Compared to January 2022, there was growth of 3.03% (without adjustment for the period, since the comparison is between equal months). Accumulated in 12 months, the indicator was also positive, at 3%.

However, the official indicator of the Brazilian economy is the Gross Domestic Product (GDP), calculated by the Brazilian Institute of Geography and Statistics (IBGE). With a quarterly result, GDP for the first quarter of 2023 will be released on June 1st.