Brasília – The economy should experience a downturn of 1.7% this year, according to estimation of financial institutions surveyed weekly by the Brazilian Central Bank. Last week, the forecast for the contraction of the Growth Domestic Product (GDP), the sum of all goods and services produced in the country, stood at 1.5%. For next year, the estimation calls for a growth of the economy, but of only 0.33%. Last week, the growth forecast stood at 0.50%.
While the economy shrinks, the inflation goes up. For the financial institutions, the Extended National Consumer Price Index (IPCA) should end the year at 9.15% over 9.12% of the previous forecast. This was the 14th straight forecast increase. For 2016, there was a slight reduction of 5.44% to 5.40%.
To try to stop the prices’ increase, the Monetary Policy Committee (Copom) has been raising the Selic, the benchmark interest rate. The rate was raised six straight times and the BC has shown that the raising trend remains. The next meeting of the committee is scheduled for July 28th and 29th. Currently, the Selic stands at 13.75% per year and the financial institutions are expecting the rate to reach 14.5% at the end of this year. At the end of 2016, the Selic should stand at 12.25% per year.
The dollar value remains at R$ 3.23 for the end of 2015 and at R$ 3.40 for the end of 2016.
*Translated by Sérgio Kakitani
