Brasília – Investors and financial market analysts are expecting Brazil’s Gross Domestic Product (GDP) to decline by 0.5% in 2015. The expectation has worsened, from 0.42% the preceding week. For 2016, the economy is expected to rebound with a 1.5% increase in GDP.
The data have been released today (23rd) by the Brazilian Central Bank in its Focus Bulletin, a weekly poll of financial institutions. Analysts are also more pessimistic regarding the inflation rate measured by the Extended Consumer Price Index (IPCA, in the Portuguese acronym). The market is expecting the IPCA to be 7.33% by the end of 2015; the previous forecast had been 7.27%. The top end of the target range set by the government’s economic team is 6.5%. Government-controlled prices are expected to be up 10.4%. The previous projection was 10%.
The benchmark interest rate, aka Selic, is expected to be 12.75% per annum in 2015. The exchange rate projection remains at R$ 2.90 for US$ 1. The net debt-to-GDP ratio estimate is 37.9%. Financial analysts believe industrial production should be down 0.35%.
The projection for the current account deficit, a measure of the quality of the country’s external accounts, is US$ 78.4 billion – higher than last week’s US$ 78 billion. The trade surplus forecast has dropped from US$ 5 billion to US$ 4.4 billion. Foreign direct investment is expected to reach US$ 60 billion.
*Translated by Gabriel Pomerancblum
