Brasília – The Secretariat for Economic Policy (SPE) at Brazil’s Ministry of Economy kept its 2021 growth forecast unchanged. It also changed up its inflation estimate due to high food prices. The forecasts were released in the Macro Fiscal Bulletin this Wednesday (17). Gross Domestic Product (GDP) is seen growing 2.5% per year from 2022 to 2025.
Brazil’s GDP is expected to climb 3.2% in 2021, the same as in the November 2020 Bulletin. “Uncertainty is heightened by the challenges in addressing the pandemic, but on the other hand, indicators from the first two months of the year point to a sustained recovery of economic activity,” the SPE argued. It said, however, that March results are still uncertain, since new pandemic-related developments are taking place such as stricter social distancing.
Inflation
The Extended National Consumer Price Index (IPCA), which gauges inflation in Brazil, is expected to end the year at 4.4%. “The primary culprit in the revised projection was food prices. As per the minutes of the Central Bank’s Monetary Policy Committee (Copom) meeting, the SPE said the recent hike in international commodity prices and its effects on food and fuel prices implies heightened inflation forecasts in the months ahead. However, according to the Copom, these shocks are only temporary.
Translated by Gabriel Pomerancblum
