Ipea projects higher growth and lower inflation in 2023

The Institute for Applied Economic Research (Ipea), in view of the advances observed in the Brazilian economy in the first three months of the year, revised the economic forecasts and expects that Brazil will grow more and that inflation will be lower than previously expected for 2023. new forecasts and the institute’s analyzes were released today (5), in the Overview of the Conjuncture.

The institute’s new forecast is that the Gross Domestic Product (sum of all final goods and services produced in the country – GDP) will grow by 2.2% in 2023. The old forecast, until March, was for growth of 1.4% . Inflation should be lower. The forecast of the Directorate of Macroeconomic Studies and Policies (Dimac) for the Extended National Consumer Price Index (IPCA) increased from 5.6% to 5.1% in 2023.

According to the report, the revision of the GDP forecast in 2023 occurred after the growth of the first three months of the year exceeded Ipea expectations. The institute’s forecast for the period was a growth of 1.2% compared to the previous period, that is, in relation to the last three months of 2022, and that it would advance by 2.7% compared to the first three months of 2022. The growth, however, was higher, 1.9% compared to the previous quarter and 4% compared to the same period in 2022.

Lower-than-expected inflation, in turn, is also due to the appreciation of the Brazilian real, which, together with the deflation of commodities results in downward pressure on wholesale prices, leading to a scenario of disinflation in retail and consumer prices. For the remainder of the year, therefore, the outlook is, according to the analysis released, of stability.

In the document, the researchers detail some factors that contribute to the projected scenario. Among them, the increased demand for commodities companies, motivated, among other factors, by the economic reopening of China. This year, the Brazil recorded surplus records monthly trade balance for the month, driven by increased exports of commodities such as oil, iron ore, corn and soybeans.

Within the country, Ipea points to two distinct forces in opposite directions. On the one hand, the maintenance for a prolonged period of high interest rates by the monetary authority, reaching an annualized average value of 45% in the credit market, which puts downward pressure on growth. On the other hand, the fiscal measures that allow the maintenance of family incomes, as well as the increase in public demand, both in terms of government consumption and public investments, boost growth.

Ipea also points out that new measures continue to act to sustain family income in the second quarter of the year, such as a new increase in the minimum wage, readjustment of salaries of federal public servants, advances in salary bonuses and adjustments to the value of Bolsa Família .

O report can be accessed in full on the internet.