According to the Ministry of Finance, this year the estimate of high prices has increased from 4.60% to 5.31%; for 2024, the projection is 3.52%
BRASÍLIA- In the first round of projections for the country’s main economic indicators, the new one Ministry of Finance revised upwards the projection of inflation measured by Extended National Consumer Price Index (HICP) in 2023.
According to the new grid of macroeconomic parameters of the folder, the estimate of the price increase this year has gone from 4.60% to 5.31%. For 2024, the projection is 3.52%.
In the document, the Economic Policy Secretariat (Spe) argues that the revision was motivated by the increase in the projection of regulated prices, only partially offset by the expected slowdown in inflation of foodstuffs for households and industrial goods. “From 2025, the HICP is expected to converge towards the 3.00% target,” he added.
To the latest Focus reportmarket analysts questioned by Central bank estimated that the HICP is expected to accrue an increase of 5.96% in 2023 and 4.01% in 2024.
All projections for inflation in 2023 are well above this year’s target ceiling of 3.25%, which has a tolerance margin of 1.5 percentage points (index from 1.75% to 4.75%). In the case of 2024, the target is 3.00%, with a margin of 1.5 points (from 1.50% to 4.50%).
The Finance Ministry also updated the projection of the National Consumer Price Index (INPC) used to adjust the minimum wage. According to the new grid of macroeconomic parameters in the file, the estimate of the increase in the indicator this year has gone from 4.90% to 5.16%. For 2024 the projection is 3.30%.
The Treasury’s estimate for the PGI-DI increase in 2023 goes from 4.55% to 3.85%. For next year, the projection is 3.80%. The estimates are used in the preparation of the Bimonthly Report on the Evaluation of Income and Expenditure, to be published next Wednesday.
GDP
The ministry headed by Fernando Haddad also reduced optimism about the increase of Gross Domestic Product (GDP) in 2023. Nonetheless, the portfolio has kept its expectations for how the business will perform this year well above the market’s level.
According to the parameter grid released a little while ago by the Economic Policy Secretariat, the estimate of the expansion of activity in 2022 has gone from 2.1% to 1.61%. The previous projection was made in November, again in the last government.
According to the Macrofiscal Bulletin, the reduction of 0.49 percentage points is due to the marginal cooling of the economic indicators released by the previous document and also to the delayed effects of monetary policy on activity and on the credit market which are more intense than expected. “Prospects of tight liquidity in the US and other economies also contributed to the revision of the previous projection,” the SPE noted.
The ministry also reduced its economic growth projections for 2024, from 2.50% to 2.34%. As for 2025, the prognosis has increased from 2.50% to 2.76%. For 2026, the estimate went from 2.2% to 2.42%. And for 2027, the projection announced today is 2.49%.
The 1.61% increase expected for this year reflects, according to the SPE, the acceleration of the agricultural sector and the cooling of Industry and Services. For the period 2024 to 2027, the expectation is for an average annual growth of 2.5%. “This expansion builds on investment plans and opportunities that can be explored with the transition to a green and sustainable economy,” SPE stressed. The secretariat also attributes the expansion to reforms due to be implemented in 2023, such as tax and fiscal reforms, with the potential to structurally reduce the interest rate in Brazil.
In the latest Focus report, market analysts consulted by the Central Bank estimated a GDP increase of just 0.89% in 2023. For 2024, Focus’s estimate is an increase of 1.50%. Market estimates for the years 2025 and 2026 are 1.80% and 1.98% respectively.
Source: Terra
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