Brasília – The official forecast for Brazilian economy growth this year has declined from 2.5% to 1.8%. The estimate is in the Revenue and Expense Report, disclosed this Tuesday (22nd) by the Ministry of Planning, Budget and Management.
Besides a smaller Gross Domestic Product (GDP) growth, the economy team raised the official inflation rate projection. According to the report, the Extended Consumer Price Index (IPCA) should close the year at 6.2%, as against 5.6% in the previous forecast.
Disclosed every two months, the report brings official forecasts for Brazilian economy, which are used as a basis to project the change in revenue and expenses, and define the execution of the Union’s General Budget.
Despite being presented by the Ministry of Planning, the estimates for economy parameters are compiled by the Economic Policy Secretariat of the Ministry of Finance.
According to the report, the changes in the GDP projection are a reflection of the quarterly numbers released until the moment by the Brazilian Institute of Geography and Statistics (IBGE). The hike in the inflation rate, as justified by the report, is linked to the data of the IPCA as observed by June.
Though the government is dealing with higher inflation rate and lower growth, the projections are still more optimist than the financial sector’s estimates. According to the Focus Bulletin, weekly survey carried out with financial organizations by the Brazilian Central Bank, the market economists believe the GDP will close 2014 with a growth of 0.97%, and the IPCA should reach 6.44%.
The IPCA target for 2014 is 4.5%, with a margin of two percentage points up or down, reaching as much as 6.5%.
*Translated by Rodrigo Mendonça
