Financial market narrows down forecast for Brazil’s GDP decline
Financial institutions heard by Brazil’s Central Bank have revised their forecast for the decline in the country’s economy for the second straight time. The Gross Domestic Product (GDP)—the sum of all goods and services produced in the country—is projected to shrink 3.23% this year, a slight change from last week’s forecast (-3.24%).
The growth projection for 2017 has been maintained at 1.1% for the third consecutive week.
These forecasts are part of a survey carried out by the Central Bank every week, which provides financial market insight into the main economic indicators. The results are consolidated into the Focus Market Readout report published on Mondays.
The forecast for the end-of-year inflation rate as officially gauged by the Broad National Consumer Price Index (IPCA) has been slightly revised down from 7.21% to 7.20% for 2016 and from 5.20% to 5.14% in 2017.
These figures are still well above the 4.5% inflation target. The forecast for this year is also above the upper target range (6.5%). The upper target range set for 2017 is 6%.
Inflation target
The Central Bank is responsible for ensuring inflation stays within target by using such instruments as the benchmark interest rate (SELIC) to influence economic activity. The SELIC rate currently stands at 14.25% per annum.
The latest existing forecasts for the SELIC rate have been maintained—13.50% p.a. at the end of 2016 and 11% p.a. at the end of 2017.
The forecasts for the end-of-year dollar exchange rate have also remained unchanged in the latest survey at R$3.30 (2016) and R$3.50 (2017).
Translated by Mayra Borges
Fonte: Financial market narrows down forecast for Brazil’s GDP decline
