Authorities predicts progress of two.7% in GDP this yr; inflation forecast falls

The SPE (Secretariat of Economic Policy) of the Ministry of Economy today improved the official projections for inflation and GDP (Gross Domestic Product) this year.

The estimate is that the GDP will grow 2.7% this year, against the previous projection of 2%. In the bulletin, the secretariat explains that the review is mainly due to the GDP result in the 2nd quarter of this year, which grew by 1.2%, above the previously estimated.

The government’s projections are more optimistic than those of the financial market. Data from the Focus bulletin released last Monday (12) show a projection of a 2.39% increase in GDP this year and 0.50% in 2023.

“The growth in activity is a reflection of the increase in employment, the performance of the service sector and the increase in the investment rate”, evaluates the ministry.

Inflation index should be lower than expected. The expectation for the IPCA (National Broad Consumer Price Index, which measures the country’s official inflation) in 2022 fell from 7.2% to 6.3% – below the accumulated in the last 12 months until August, which was 8 .73%.

The Central Bank’s target for inflation this year is 3.5%, with a tolerance margin of 1.5 percentage points up or down — that is, ranging between 2% and 5%.

Investors forecast that inflation will end 2022 at 6.40%, slightly above the government estimate. For 2023, the market projection is at 5.17%, higher than the official estimate.

And for next year? The government maintained its forecasts for 2023, with growth of 2.5% in GDP and 4.5% for the inflation rate.

Among the positive factors for the growth perspective, the ministry mentioned the rise in the service sector, the resumption of the economy with the cooling of the covid-19 pandemic and the decline in the unemployment rate.

The document, on the other hand, cites external risks, such as slowing global growth and the impacts of the war in Ukraine.

Source: Uol