Market lowers forecast for inflation this 12 months, after 19 weeks on the rise, factors out Boletim Focus

According to the Market Focus Report, the projection for the 2022 IPCA went from 5.38% to 5.33%, after 19 weeks of highs

With the latest economic activity data, the financial market continued to improve forecasts for the growth of the Gross Domestic Product (GDP) this year in the Focus Bulletin, even if only marginally. The projection for the increase in GDP in 2022 went from 2.00% to 2.02%, the eighth consecutive increase, against 193% a month ago. The estimate for the expansion of the GDP in 2023, in turn, worsened, from 0.41% to 0.39%, compared to 0.49% a month before.

Considering only the 54 responses in the last five working days, the estimate for GDP at the end of 2022 jumped from 1.99% to 2 12%. In the case of 2023, there were 52 updates in the last five business days, with a variation from 0.50% to 0.48%.

The Focus Report released this Monday, 22, still showed that the projection for GDP growth in 2024 remained at 1.80%. For 2025, the median was maintained at 2.00%. Four weeks ago, the rates were 1.70% and 2.00%, respectively.

Focus also showed today a reduction in the projection for the indicator that measures the ratio between the net public sector debt and GDP for 2022. The median went from 59.15% to 59.00%, the same percentage as a month ago.

The report also brought stability in the outlook for the relationship between the primary result and GDP this year, with the market forecasting a surplus of 0.30%. A month ago, the median was positive at 0.22%. The nominal deficit-to-GDP ratio in 2022 remained at 6.80%, repeating the rate of four weeks earlier.

The primary balance reflects the balance between government revenue and expenditure, before interest payments on the public debt. The nominal result reflects the balance after interest expenses.

In relation to 2023, the estimate for net debt in relation to GDP dropped from 63.97% to 63.65%, from 63.60% a month ago. The median for the primary deficit deteriorated from 0.37% to 0.47% of GDP. For the nominal gap, the estimate remained at 7 70%. The percentages were negative at 0.30% and 7.70%, respectively, four weeks ago.

Trade balance

Financial market economists raised the estimate for a trade balance surplus in 2022 from US$66.40 billion to US$67.20 billion, up from US$68.50 billion a month ago, according to the Focus survey. For 2023, the projection remained at US$ 60.00 billion, the same value expected four weeks ago.

In the case of the projected deficit in the current account of the balance of payments in 2022, the median remained at US$ 18.50 billion, against US$ 18.00 billion a month ago. In 2023, the projection for the current account gap also remained at US$ 30 00 billion. A month ago, the expectation was already a deficit of US$ 30.00 billion.

For analysts consulted weekly by the BC, the inflow of Direct Investment in the Country (IDP) will be enough to cover the hole in current transactions in these years. The median forecast for the 2022 PDI remained at $58.00 billion, up from $57.85 billion a month ago. For 2023, it also continued at $65.00 billion, up from $60.75 billion four weeks ago.

Selic at the end of 2022 remains at 13.75% per year

The projection for the Selic rate at the end of 2022 continued for the 9th week in a row at 13.75% in the Focus Bulletin, its current level, with the signaling of the central bank that the cycle of interest rate hikes may have ended in the Monetary Policy Committee (Copom) of August. A month ago, the percentage was already 13.75%. Likewise, the median for the Selic at the end of 2023 remained at 11.00%, from 10.75% four weeks earlier.

Considering only the 75 responses in the last five working days, the expectation for the basic interest rate at the end of this year also remained at 13.75%. For the end of 2023, the 74 revisions made in the last five business days did not change the median of 11.00%.

In this month’s Copom, the Selic rose 0.50 percentage point, from 13.25% to 13.75%, and the collegiate said that it will assess the need for an additional hike, of 0.25pp, in September.

“The Committee will assess the need for a minor residual adjustment at its next meeting. The Copom emphasizes that it will remain vigilant and that the future steps of monetary policy may be adjusted to ensure the convergence of inflation to its targets”, said the collegiate.

In the minutes, the BC added that it assesses that the strategy required to bring inflation to “around the target” in the relevant horizon considers the increase set to 13.75% in August and the maintenance of the rate in a very contractionary territory for a long period. .

According to the Focus Bulletin, the forecast for the Selic at the end of 2024 remained at 8.00%, the same percentage as a month ago. The median for the end of 2025 was maintained at 7.50%, repeating the rate of four weeks earlier.

Exchange rate for 2022 remains at BRL 5.20

The Focus Market Report released this Monday morning, 22, by the Central Bank (BC), showed maintenance in the US currency scenario in 2022 and 2023 for the fourth week in a row. The estimate for the exchange rate this year remained at R$5.20, the same value as a month earlier. For 2023, it also remained at R$5.20, repeating the estimate from four weeks ago. The annual exchange projection published in Focus is calculated based on the average for the rate in December, and no longer on the value projected for the last business day of each year, as it was until 2020. With this, the Central Bank expects to bring greater precision for the exchange rate projections of the financial market.

IPCA for 2023 drops from 5.38% to 5.33%, projects Focus

The Focus Bulletin released this Monday, 22nd, showed an interruption in the process of deterioration of inflationary expectations for 2023, the main focus of monetary policy, although the estimate is still above the ceiling of the target (4.75%). The median for the IPCA – official inflation index – dropped from 5.38% to 5.33%, after a 19-week rise. A month ago, the projection was 5.30%.

For 2022, the median continued its cooling trajectory, driven mainly by government measures to lower fuels and recent reductions in gasoline prices by Petrobras. The estimate dropped from 7.02% to 6.82%, the eighth reduction in a row, also well above the upper limit of the objective to be pursued by the Central Bank (5.00%). Four weeks ago, the median was 7.30%.

Considering only the 95 estimates updated in the last 5 working days, the median for 2022 went from 6.95% to 6.69% and that for 2023 was from 5.34% to 5.30%.

The medians released in this week’s Focus continue to point to three consecutive years of exceeding the target to be pursued by the Central Bank, after the breach already observed in 2021, with the IPCA of 10.06%. The target for 2022 is 3.50%, with a top tolerance of up to 5.00%, while for 2023, the target is 3.25%, with a band up to 4.75%.

Showing signs of broader de-anchoring, the median for the 2024 IPCA remained at 3.41%, against 3.30% a month ago. The forecast for 2025 remained at 3.00%, the same percentage as 58 weeks ago. The target for the two years is 3.00%, with a range of 1.5% to 4.5%.

In this month’s Monetary Policy Committee (Copom), the BC updated its forecasts for inflation with estimates of 6.8% in 2022, 4.6% in 2023 and 2.7% for 2024. The collegiate raised the Selic by 0 .50 percentage point, to 13.75% per year.

other months

Financial market economists began to predict greater deflation for the IPCA in August, from -0.19% to -0.26%, according to the Market Focus Report. A month earlier, the projected percentage was up 0.05%.

For September, the IPCA high projection in Focus dropped from 0 48% to 0.39% compared to 0.50% four weeks ago. For the October index, the increase estimate went from 0.54% to 0.53%, from 0.55% a month earlier.

The estimate for smoothed inflation for the next 12 months has also slowed, from 5.71% to 5.53% from one week to another – a month ago it was 5.38%.

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