Focus projection for GDP growth in 2023 changes from 0.84% to 0.85%
After the release of the Gross Domestic Product (GDP) for 2022 (2.9%), the Focus Bulletin released this Monday (6) showed further progress in the scenario of economic growth in 2023, albeit marginal. The median for GDP growth in 2023 increased from 0.84% to 0.85%, against 0.79% a month ago. Considering only the 39 responses in the last five working days, the estimate for GDP at the end of 2023, in turn, dropped from 0.90% to 0.85%.
For 2024, the Focus Report showed stability in the prospect of GDP growth at 1.50%, the same projection ten weeks ago.
In relation to 2025, the median remained at 1.80%, against 1.89% four weeks earlier. Focus also brought the estimate for 2026, which has been at 2.00% for 51 weeks.
Selic at the end of 2023 remains at 12.75% per year, points out Focus
Despite the new round of pressure exerted by the federal government on the Central Bank (BC) last week with a view to lowering interest rates, the expectation for the Selic rate remained stable for the end of 2023, 2024 and 2025 in the Focus Bulletin.
The median for basic interest at the end of 2023 remained at 12.75% per year, while for the end of 2024 it remained at 10.00%. Four weeks ago, estimates were 12.50% and 9.75%, in that order.
Considering only the 44 responses from the last five working days, the median for the end of 2023 dropped from 13.00% to 12.75%. By the end of 2024, it also dropped, from 10.25% to 10.00%, with 42 updates in the last week.
At the first Monetary Policy Committee (Copom) in the new Lula government, in February, the collegiate stated that fiscal uncertainty and the discouragement of inflationary expectations in longer terms increase the cost of disinflation. On that occasion, the BC maintained the Selic rate at 13.75% per annum for the fourth consecutive meeting.
After direct and incessant attacks by Lula, his ministers and the PT, the BC president considered the government’s questions about the level of fair interest rates and assessed that the body can be more didactic in explaining why the Selic is at this high level . He also indicated that he wants to work together with the government and signaled that advancing the reform agenda is the path to a faster drop in interest rates, and not changing the inflation target.
At Focus, the projection for the Selic at the end of 2025 continued at 9.00%, the same median as four weeks ago. The bulletin also brought the projection for the Selic at the end of 2026, which rose from 8.50% to 8.75%, from 8.50% a month earlier.
Expectations for the IPCA remain stable in 2023 and in the coming years
Inflationary expectations for this and the coming years showed stability in the Focus Bulletin released this Monday morning, the 6th, although far from the targets. The projection for the IPCA – the official inflation index – this year remained at 5.90% after 11 consecutive increases. A month earlier, the median was 5.78%. For 2024, an increasingly relevant horizon for the BC’s inflation convergence strategy, the projection continued at 4.02% for the second week in a row, from 3.93% four weeks ago.
Considering only the 57 estimates updated in the last 5 working days, the median for 2023 dropped from 5.93% to 5.91%. For 2024, it ranged from 4.05% to 4.01%, considering 53 updates in the period.
Currently, the focus of monetary policy is on the years 2023 and, with greater weight, on 2024. The median in the Focus for official inflation in 2023 is well above the ceiling of the target (4.75%), pointing to three years of failure to comply with the Central Bank’s main mandate, after 2021 and 2022. For 2024, the median is above the center of the target (3.00%), but still within the range that goes from 1.50% to 4.50%. The median for the 2025 IPCA also continued at 3.80%, from 3.50% a month ago.
Exchange rate for 2023 remains at R$ 5.25, projects Focus
The scenario for the US currency in 2023 and 2024 was stable this week in the Focus Market Report released this Monday, the 6th. The estimate for the exchange rate this year continued at R$ 5.25, the same value expected a month ago. For 2024, the median remained at R$5.30, repeating the median of four weeks ago. The annual exchange rate projection published in Focus is calculated based on the average for the rate in the month of December, and no longer on the value projected for the last working day of each year, as it was until 2020. With this, the BC hopes to bring greater precision for the exchange rate projections of the financial market.
The projection for the primary deficit in 2023 improved in the Focus Bulletin, from 1.03% to 1.00% of GDP, against 1.10% four weeks earlier. For the nominal deficit this year, the median remained at 7.85% in the last week, from 8.10% of GDP a month ago.
The primary result reflects the balance between government revenue and expenditure, before interest payments on the public debt. The nominal result reflects the balance after interest expenses.
Regarding the indicator that measures the ratio between the public sector net debt and GDP for 2023, the estimate dropped from 61.23% to 61.00% of GDP, from 61.45% a month ago.
For 2024, the projection for the primary deficit dropped from 0.80% to 0.75% of GDP, while the predicted nominal deficit varied from 7.20% to 7.35% of GDP. A month ago, the percentages were 1.00% and 7.05% of GDP, in that order.
In the case of debt, the estimate was maintained at 64.00% of GDP, up from 64.38% four weeks earlier.
Financial market economists reduced the expectation for the trade balance surplus in 2023 in the Focus Bulletin. The projection dropped from US$ 57.35 billion to US$ 57.00 billion, against US$ 57.60 billion a month ago. For 2024, the median rose from US$54.50 billion to US$55.00 billion, from US$53.90 billion four weeks ago.
Regarding the estimate of the balance of payments current account deficit for 2023, the deficit median continued at US$ 50.00 billion, from US$ 47.00 billion a month ago. For next year, the deficit estimate increased from US$ 50.25 billion to US$ 51.50 billion, from US$ 50.00 billion four weeks ago.
For the analysts consulted weekly by the BC, the inflow of Direct Investment in the Country (IDP) will be more than enough to cover the gap in current transactions this and next year. The median forecast for the PDI in 2023 remained at US$ 80.00 billion, the same value expected four weeks ago. For 2024, the estimate was also maintained at US$ 80.00 billion, repeating the median of a month earlier.