Central Financial institution raises financial development forecast to 2.7% in 2022

The Central Bank improved its economic growth forecast in 2022 to 2.7%, compared to an estimate of 1.7% made in June, according to the Quarterly Inflation Report released today.

The document also presented a forecast of a 1.0% increase in GDP (Gross Domestic Product) for 2023. The Ministry of Economy also predicts an expansion of 2.7% for GDP this year, but sees an increase of 2.5% in 2023.

The market, according to the latest Focus survey, estimates that the economy will grow 2.67% in 2022 and 0.5% next year.

Regarding monetary policy, the Central Bank reiterated that it will remain vigilant, assessing whether the strategy of maintaining the basic interest rate for a sufficiently long period will be able to ensure the convergence of inflation.

Currently, the basic interest rate is at 13.75% per year, after the BC decided to interrupt the cycle of monetary tightening.

Rate and access to credit. The Central Bank forecast credit growth in the country of 14.2% this year, compared to an estimate of 11.9% made in June.

Now, the expectation is that credit to families will rise 16.4% in 2022, against a previous expectation of 14.4%. For companies, the increase was calculated at 11.2%, compared to 8.5% in the last report.

For the stock of free credit, in which rates are freely agreed between banks and borrowers, the BC now projects an expansion of 17.2% in 2022, against a high of 15.2% before. For earmarked credit, which meets the parameters established by the government, the outlook is for an increase of 9.7% this year, against 7% before.

In the BC’s accounts, which now also presents forecasts for 2023, the expansion of the credit stock next year will be 8.2%. In this case, the monetary authority sees an increase of 8.7% in credit to individuals and 7.4% in credit to companies.

Next year, the stock of credit with nonearmarked resources should expand by 9.6%, while the balance with earmarked resources should rise by 6.0%, added the BC.

Current transactions, investments and trade balance. The estimate for the result of current transactions this year has worsened, with a deficit of 47 billion dollars, compared to a positive balance of 4 billion dollars projected in June.

For 2023, the Quarterly Inflation Report projected a deficit of 36 billion dollars.

The BC started to see Direct Investments in the Country (IDP) of 70 billion dollars in 2022, up from 55 billion dollars before. In the view of the monetary authority, the level should rise to 75 billion dollars in 2023.

According to the BC’s accounts, the trade balance will have a surplus of US$42 billion this year, against a previous estimate of US$86 billion, while next year trade will be positive at US$54 billion.

Source: Uol