Brasília – Financial institutions polled by the Brazilian Central Bank revised their economic contraction projection again, this time from 1.49% to 1.5%. This is the seventh consecutive turn for the worse in the Gross Domestic Product (GDP) estimate. Growth is expected next year, but only 0.5%. The industrial production forecast is minus 4.72%, worse than last week’s 4%. The growth projection for 2016 was revised down from 1.50% to 1.35%.
The financial market also raised its 2015 inflation forecast for the 12th straight time. This time, the projection for the Extended Consumer Price Index (IPCA) climbed from 9% to 9.04%. Four weeks ago, the projection had been 8.46%. The estimate for 2016 dropped from 5.50% to 5.45%. The Central Bank itself sees 9% inflation this year, much higher than the top threshold of its target range (6.5%). The financial regulator only hopes to meet the center of the target (4.5%) in 2016. In an attempt to hold prices back, the bank’s Monetary Policy Committee (Copom) has repeatedly raised the benchmark interest rate – known as Selic. This happened six times, and the Central Bank gave signs that the upward cycle persists.
The US dollar exchange rate forecast went from R$ 3.20 to R$ 3.22 for US$ 1 by the end of 2015, and from R$ 3.37 to R$ 3.40 for US$ 1 by the end of 2016.
*Translated by Gabriel Pomerancblum
