Government revises GDP growth forecast to 1.9% in 2023

The Secretariat for Economic Policy (SPE) of the Ministry of Finance has revised upwards the growth projection for the Gross Domestic Product (GDP, sum of goods and services produced in the country), from 1.6% to 1.9% in 2023. estimate for inflation also increased. The forecasts are in the Macrofiscal Bulletin released this Tuesday (23).

According to the Ministry of Finance, the increase in the projection is due to the increase in expected growth for this year, which is reflected in the release of economic indicators with better results than those projected for the first quarter and for the beginning of the second quarter.

For the agricultural sector, for example, the growth projection for the year was revised from 10.4% to 11%. The growth forecast for Industry increased slightly, from 0.4% to 0.5%, while the projection for Services increased from 0.9% to 1.3%, highlights the report.

The expected growth for 2024 remained at 2.3% and, for 2025, it remained at 2.8%.

Inflation

The inflation forecast based on the Extended National Consumer Price Index (IPCA) increased from 5.31% to 5.58%. The estimate remains above the inflation target for the year, set by the National Monetary Council (CMN) at 3.25%, with a tolerance interval of 1.5 percentage points up or down. That is, the lower limit is 1.75% and the upper limit is 4.75%.

“The revision of the IPCA projection was motivated, above all, by the change in the ICMS rate on gasoline and by the expected readjustments for gambling and health insurance, only partially offset by the announced reduction in the price of gasoline, with no response to the drop in international oil prices”, says the bulletin.

The National Consumer Price Index (INPC), used to establish the minimum wage and correct pensions, should end this year with a variation of 5.34%, as forecast by the SPE, against 5.16% predicted in the previous bulletin, released in March. In the projection for the General Price Index – Internal Availability (IGP-DI), which includes the wholesale sector, the cost of civil construction and the final consumer, it fell from 3.85% to 2.06%.

Other parameters

The report also updated forecasts for public accounts. The primary deficit projection (negative result in government accounts without public debt interest) ranged from R$99.01 billion to R$100.67 billion.

The value incorporates the package of fiscal measures announced in January. At the time, the Minister of Finance, Fernando Haddad, announced that he expected a drop in the deficit to around R$ 100 billion this year.

As for the General Government Gross Debt (GGDG), the main parameter used to compare countries’ indebtedness, the forecast dropped slightly from 77.6% to 77.09% of GDP.