Economic activity up 3.32% in February

After becoming stable in January, the Brazilian economic activity was discharged in February this year, according to information released this Friday (28), in Brasília, by the Central Bank (BC). The Central Bank Economic Activity Index (IBC-Br) increased by 3.32% in February compared to the previous month, according to seasonally adjusted data (adjusted for the period).

In February, the IBC-Br reached 147.49 points. Compared to the same month of 2022, there was an increase of 2.76% (without adjustment for the period, since the comparison is between equal months). Accumulated in 12 months, the indicator was also positive at 3.08%.

The IBC-Br is a way of evaluating the evolution of the country’s economic activity and helps the BC 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, stability in January and, now, new growth. The results were in line with BC’s decision to keep the Selic rate high in order to control inflation. 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. Even so, the result of the BC index points to a recovery in activity.

GDP

The official indicator of the Brazilian economy, however, 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. GDP is the sum of all final goods and services produced by a country.