Market says Brazil economy to grow 1.2% in 2017

Financial institutions surveyed by the Central Bank (BC) announced that the growth forecast for the Brazilian economy in 2017 went from 1.1% to 1.2%. For 2016, the institutions still predict a shrinkage in the economy. The country's foreseen GDP holds steady at 3.20% for 2016.

The estimates can be found in a weekly survey conducted by the Central Bank on the chief indicators in the economy. The data are released every Monday in the Focus Market Readout.

Inflation

The projection from the financial institutions for the inflation, as measured by the Broad Consumer Price Index (IPCA), was kept at 7.31% this year, and slid from 5.14% to 5.12% in 2017. The estimates are far from the 4.5% set as center of the target for inflation. For 2016, the forecast surpasses its upper limit, 6.5%. The ceiling of the target for 2017 is 6%.

SELIC

It is the duty of the Central Bank to keep the inflation within the limits of the target. One of the tools used to curb the economic activity, and the inflation as a result, is the benchmark interest rate, the SELIC. Today, the rate stands at 14.25% per annum. The estimate of financial institutions, however, remain at a yearly 13.75% for the end of 2017.

As for the dollar, the forecast for the exchange rate holds steady at R$3.30 at the end of this year, and was lowered from R$3.50 to R$3.45 for the end of 2017.

Translated by Fabrício Ferreira