Banks forecast narrower GDP drop

01 de agosto de 2016

Financial institutions responding to a Central Bank poll believe Brazil’s economy is set to shrink by 3.24% this year. Last week’s forecast had been a bit worse at 3.27%.

Brasília – Financial institutions polled by the Brazilian Central Bank are now expecting the economy to shrink a bit less than they did before in 2016. The Gross Domestic Product (GDP) contraction estimate changed from 3.27% to 3.24%. In 2017, 1.1% growth is expected. The projections are from a weekly Central Bank poll covering major economic indicators.

The poll’s respondents expect inflation, measured under the Extended National Consumer Price Index (IPCA), to be 7.21% this year, the same as they did last week. The forecast for 2017 fell from 5.29% to 5.20%.

The Central Bank strives for balanced interest rate policymaking, so as to keep inflation within the target range set by the National Monetary Council. Currently, the benchmark interest rate (Selic) is 14.25% per annum. At the end of 2016, Brazilian banks expect the rate to have edged up from 13.25% to 13.50% per annum. The forecast for the end of 2017 has remained at 11% per annum for five weeks in a row.

The US dollar price projection changed from BRL 3.34 to BRL 3.30 at the end of 2016, and was kept at BRL 3.50 for the end of 2017.

*Translated by Gabriel Pomerancblum