Market raises inflation forecast and sees lower GDP growth in 2022 – Prime Time Zone


Entities consulted by the Central Bank project IPCA at 8.45% at the end of 2021; for next year, the estimate for the economy retracts to 1.57%

EDUARDO MATYSIAK/FUTURA PRESS/ESTADÃO CONTENTForecast for this year’s inflation rises for the 25th week in a row and contaminates expectations for 2022

O financial market raised expectations again for the inflation in 2021 and 2022, according to the Focus Bulletin released this Monday, 27. For this year, the median of the Central Bank survey with more than a hundred institutions pointed to an increase of 8.45% of the Broad Consumer Price Index (IPCA), compared to 8.35% in the last edition. It was the 25th week in a row that the market has revised its forecast upwards. The BC pursues the inflation target of 3.75% in 2021, with a margin of 1.5 percentage points up or down, that is, between 2.25% and 5.25%. The preview of the IPCA in September was 1.14% — the highest value since 1994 — and accumulated a 10.05% increase in the last 12 months. The constant upward revision of the forecast for this year already contaminates expectations for 2022. Market analysts changed the IPCA estimate for next year upwards to 4.12%, compared to a 4.10% projection last week. It was the 10th consecutive edition with increased expectations. For 2022, the national monetary authority pursues the 3.5% target, with a variation between 2% and 5%.

Financial market analysts retracted the growth projection of the Gross Domestic Product (GDP) in 2022 to 1.57%. Last week, the median pointed to advance of 1.63%. The projection for the economic recovery next year has been revised downwards for four weeks. Rising inflation, high unemployment and the impacts of the water crisis are pointed out by analysts as the main challenges for GDP growth in the next year. More pessimistic analyzes point to an advance of less than 1%. The federal government expects a 2.5% increase in GDP in 2022, but recognizes that the increase may be impacted by the worsening of the new coronavirus pandemic and the lack of rain. For this year, the financial market maintained the expectation of an increase of 5.04%, the same as last week. Analysts consulted by the Central Bank also preserved the projection for the Selic by 8.25% per year at the end of 2021, and by 8.50% in 2022. Last week, the BC raised the basic interest rate from 5.25% to 6.25% — the fifth consecutive increase —, and indicated a further increase of 1 percentage point in the next meeting. Analysts maintained the forecast of the dollar at R$ 5.20 at the end of 2021, the same expectation as last week. For 2022, the expectation of the US currency was slightly changed to R$ 5.24, against R$ 5.23 in the previous edition.