Focus: market raises forecast for economic growth to 2.18%

The financial market is more optimistic about the country’s economy. According to the Focus bulletin, released this Monday (26) by the Central Bank, the expectation of growth in the Gross Domestic Product – GDP, sum of goods and services produced in the country – increased from 2.14% to 2.18% , between last week and this week.

Four weeks ago, the forecast was for growth of 1.26%. The result maintains a seven-week streak of high expectations. The Focus bulletin presents weekly projections for the country’s main economic indicators.

For the year 2024, the expectation is for GDP growth of 1.22%. A week ago, the market predicted growth of 1.2%. For subsequent years (2025 and 2026), the market projects increases of 1.83% and 1.92%, respectively.

Inflation

The market is also more optimistic with regard to official inflation in the country, with a drop in the expected rates for 2023 and 2024. For the current year, the projections of the National Consumer Price Index (IPCA) dropped from 5.12 (estimate last week) to 5.06, as reported in this week’s bulletin.

Despite expectations being better than those released a week ago, projections are still above the ceiling of the inflation target that should be pursued by the Central Bank. Defined by the National Monetary Council (CMN), the target is 3.25% for 2023, with a tolerance interval of 1.5 percentage points up or down. That is, the lower limit is 1.75% and the upper limit 4.75%.

Inflation expectations for 2024 dropped from 4% to 3.98% between last week and this week; and remained stable (3.8%) in 2025. For 2026, inflation of 3.72% is expected.

interest and exchange

Regarding the basic interest rate (Selic), the BC’s main instrument to reach the inflation target, financial market expectations remain stable, at 12.25% for 2023; by 9.5% to 2024; and by 9% and 8.75% for 2025 and 2026, respectively.

Currently, the Selic is at 13.75% per annum, as defined by the Monetary Policy Committee (Copom). The rate has been at that level since August 2022, and is the highest since January 2017, when it was also at that level.

The market forecast for the dollar exchange rate remained stable compared to last week – at BRL 5 for the end of 2023; and R$5.10 for 2024.