Financial market raises growth forecast to 2.19% in 2023

The financial market increased the growth forecast for the Gross Domestic Product (GDP) for this year for the eighth time. According to the projection of the Focus Bulletin, released today (3) by the Central Bank, the country will grow 2.19% in 2023. A week ago, the forecast was for growth of 2.18%. For next year there was also an increase in the GDP estimate to 1.28%, compared to 1.22% last week.

For inflation, the bulletin maintained the downward trend for the seventh consecutive week. The Extended Consumer Price Index (IPCA) should close this year at 4.98%. A week ago, the market projection was that inflation this year would stay at 5.06%%. Four weeks ago, the forecast was 5.69%.

The forecast remains above the inflation target for this year, defined by the National Monetary Council (CMN), which is 3.25%, with a tolerance margin of 1.5 percentage points (pp), up or down. Thus, the target will be considered formally met if it fluctuates between 1.75% and 4.75%. For 2024, the projection is that the IPCA will remain at 3.92%.

To reach the inflation target, the Central Bank uses the basic interest rate as its main instrument, the Selic, the basic interest rate, set at 13.75% per year by the Monetary Policy Committee (Copom). The rate is at its highest level since January 2017, when it was also at that level.

The next Copom meeting is scheduled for the beginning of August. For the financial market, the expectation is that there will be a decrease in the rate. The projection points out that the Selic will end the year at 12%.

Published weekly, the Focus Bulletin gathers the projection of more than 100 market institutions for the main economic indicators in the country. For 2024, the market reduced the inflation projection to 3.92%. Last week the projection was 3.98%. Four weeks ago, the forecast was that the index closed next year at 4.12%. As for 2025, the projection is that the IPCA will remain at 3.60%.

GDP

Regarding GDP, Focus estimated a drop for the year 2025, with a growth of 1.81%. For 2026, the bulletin also pointed to a trend and decline in growth, remaining at 1.90%.

Exchange

The market maintained the exchange forecast for the second week, with the dollar closing the year at R$5.00. Four weeks ago, the forecast was that the US currency would remain at R$ 5.10. For 2024, the projection is that the dollar will be at R$ 5.08, lower than the forecast in the previous week, when the forecast was R$ 5.16. For 2025, the forecast is that the exchange rate will close at R$ 5.17.