Financial market predicts 0.36% economic growth in 2022

The financial market has again reduced its forecast for Brazil`s economic growth in 2022. The projections have been published this Monday (Dec. 3) in the first Focus bulletin for 2022, released in Brasília by Brazil Central Bank. The document brings together the forecast for the main economic indicators in the country and indicates a Gross Domestic Product (GDP) of 0.36% against 0.42% estimated last week.

The market also reduced the GDP forecast - the sum of all goods and services produced in the country - for 2021, to 4.50%. In the previous week, the estimate was that the GDP would be at 4.51%. Four weeks ago, the bulletin estimated a 4.71% growth in 2021.

For 2023 and 2024, the financial market projection remained stable in relation to the previous week, with a GDP expansion of 1.80% and 2%, respectively.

For 2022, the inflation estimate is 5.03%, the same as last week. For 2021, the forecast for the Extended National Consumer Price Index (IPCA), the country's official inflation, also went downwards, from 10.02% to 10.01%. It is the fourth reduction after 35 consecutive weeks of rising projections. For 2023 and 2024, the forecasts are 3.41% and 3%, respectively.

Interest rate

The forecast for the annual basic interest rate, the so-called Selic, at the end of 2022, is 11.50%, the same as in the previous week. Currently, the rate defined by the Monetary Policy Committee Copom is 9.25% per year. For the next meeting of the organ, in February, Copom has already given signals it shall raise the Selic by 1.5 percentage points.

By the end of 2023, it is estimated that Selic shall drop to 8% per year, and for 2024, to 7%.

The market expectation for the dollar exchange rate in 2022 is BRL $ 5.60, the same as in the previous week. For 2023, the dollar exchange rate shall be at BRL $ 5.40, and in 2024 at BRL $ 5.30.