Brasília – Finance market forecasts for inflation this year are still dropping. According to a research by the Central Bank of Brazil (BC) with analysts from financial institutions, the forecast is that the National Consumer Price Index (IPCA) has dropped for the sixth time running, from 4.95% to 4.93%. For 2013, the estimate has been maintained at 5.5%.
The international financial crisis has resulted in analysts reducing estimates for growth of the Brazilian economy. The projection for expansion of the Gross Domestic Product (GDP), the sum of all goods and services produced in the country, dropped for the eighth week running, from 2.18% to 2.05%.
This estimate is lower than that of the BC, revised last week, from 3.5% to 2.5%. The Finance Ministry, in turn, maintains its expectation for growth of the economy this year to be over that of last year, which was 2.7%. For 2013, the projection of finance sector analysts is for the GDP of Brazil to grow 4.2%.
With economic activity at a weak rhythm, expectations are for the benchmark interest rate, Selic, used to stimulate the economy, to reach the end of 2012 at 7.5% a year. Currently, the Selic is at 8.5%, the lowest level since the current monetary policy was adopted, in early 1999. For 2013, however, the forecast of analysts is for Brazil’s benchmark interest rate to rise again, reaching 9% at the end of the year.
*Translated by Mark Ament
