Economy Ministry maintains GDP forecast at 1.5%

Brazil´s government increased its forecast for this year´s inflation. The Broad Consumer Price Index (IPCA), estimated in March at 6.55 percent for the year, had its forecast raised to 7.9 percent. The estimate of the National Consumer Price Index (INPC) rose from 6.7 percent to 8.10 percent, and that of the General Price Index (IGP-DI), from 10.01 percent to 11.4 percent. The estimate of the Gross Domestic Product (GDP) was maintained at 1.5 percent. The data in the Macro Fiscal Bulletin were released today (May 19) by the Economic Policy Secretariat (SPE) of the Economy Ministry.

For 2023, Brazil´s government also maintained its GDP forecast but increased the inflation estimate. The GDP should close the year 2023 with a rise of 2.5 percent (the same forecast as the last bulletin, released in March). The IPCA should end 2023 at 3.6 percent (the March forecast was an increase of 3.25 percent); the INPC, at 3.7 percent (3.5 percent was the estimate in March); and the IGP-DI, at 4.57 percent (March forecast: 4.42 percent).

“The forecast for the inflation rate [IPCA] increased from 6.55 percent to 7.90 percent in 2022, and from 3.25 percent to 3.60 percent in 2023. Inflation [IPCA] is expected to move back to the target of 3 percent a year, starting in 2024. In relation to the INPC, the projection for 2022 increased from 6.70 percent to 8.10 percent,” the document reads.

The improvement in the performance of the Brazilian GDP is due to the recovery in the service sector, and the expansion of investments, which reflects in the recovery of the labor market, the bulletin says. The publication points out that the service sector grew 1.8 percent in the first quarter of 2022, reaching the highest level since May 2015.

“The Brazilian GDP growth estimate for 2022 was maintained at 1.5 percent. From 2023 onwards, estimates remained at 2.5 percent. Since March an upward revision of market expectations for economic activities has been noted, following SPE projections.