Brasília – Financial institutions’ economic growth projections for Brazil this year keep declining. The Gross Domestic Product (GDP) growth estimate stands at 0.9%, after nine downward revisions in a row. Last week, the projection was 0.97% and four weeks ago, it was 1.1%. The estimate for 2015 has remained at 1.5% for four straight weeks now.
The projections are part of a weekly poll of financial institutions conducted by the Central Bank (BC). The poll covers the main economic indicators and its results are published in the Focus bulletin, released this Monday (28th).
Industry output is expected to be down 1.15% this year and up 1.7% in 2015.
The Focus bulletin shows that the benchmark interest rate, aka Selic, is expected to remain unchanged. The expectation has remained so for the past eight weeks. On July 16th, the BC’s Monetary Policy Committee (Copom) decided to keep the Selic at 11% per annum for the second straight time, after the rate had been increased nine times in a row in order to curb inflation.
At its latest meeting, the committee concluded that inflation should remain flat over the next few quarters, but tends to converge towards the target eventually, provided that the Selic remains the same.
The analysts polled expect the Selic rate will start increasing again in 2015. The benchmark rate is expected to be 12% by the end of the year.
The BC must strive for balance in its decisions regarding the benchmark rate, so that inflation remains within the target range set by the National Monetary Council. The midpoint of the government’s target range is 4.5% and the ceiling is 6.5%.
The Broad Consumer Price Index (IPCA) estimate for this year has been lowered repeatedly but remains near the top range of the target. According to the poll, the IPCA should be at 6.41%, as against 6.44% according to last week’s estimate. The projection for 2015 has increased from 6.12% to 6.21%.
*Translated by Gabriel Pomerancblum
