The Secretariat for Economic Policy (SPE) of the Ministry of Economy maintained its projection for economic growth this year and reduced the official estimate for inflation. The projections are in Macrofiscal Bulletin released today (17).
The inflation projection by the Extended National Consumer Price Index (IPCA) retreated from 6.3% to 5.85%. But it is still above the inflation target for the year, set by the National Monetary Council (CMN) at 3.5%, with a tolerance interval of 1.5 percentage points up or down. That is, the lower limit is 2% and the upper limit is 5%.
In the year, the IPCA has already accumulated an increase of 4.7% and, in 12 months, the total index is at 6.47%.
The National Consumer Price Index (INPC), used to establish the value of the minimum wage, should end this year with a variation of 6%, according to the forecast of the SPE, a decrease of 0.54 percentage points in relation to the previous bulletin. The projection for the General Price Index – Internal Availability (IGP-DI), which also includes the wholesale sector and the cost of civil construction, in addition to the final consumer, is 6.11%, below the previous estimate of 9.44 % and lower than the rate recorded in 2021, of 17.74%.
GDP
The estimate for the increase in the Gross Domestic Product (GDP, sum of goods and services produced in the country) was 2.7%, the same number released in the previous bulletin, in September. According to the SPE, the performance of employment, the service sector and the investment rate justified the maintenance.
“As highlighted in previous bulletins, a slowdown in economic activity was already expected in the second half of this year, as a result of the lagged effects of the monetary policy adjustment cycle [aumento de juros pelo Banco Central]?? However, it is projected that the impacts arising from the increase in interest rates will be reduced over the next year”, informed the SPE.
In 2021, Brazil’s GDP grew by 4.6%, totaling BRL 8.7 trillion. Despite maintaining the estimate for 2022, the SPE reduced the growth forecast for 2023 from 2.5% to 2.1%. According to the agency, the more adverse external scenario, with high interest rates in the US economy and the war in Ukraine, affects economic expansion in the rest of the world. The projection for 2024 was maintained at 2.5%.
According to the Ministry of Economy, there was an expansion in the job market, with the unemployment rate falling to 8.7% in the third quarter, according to the Continuous National Household Sample Survey (Continuous PNAD), by the Brazilian Institute of Geography and Statistics (IBGE). According to the IBGE, service sector indicators had an annualized expansion of 3.2% from July to September.
Prospects
Despite acknowledging the economic slowdown in the third quarter, the SPE expects the economic recovery to continue in the fourth quarter, driven by services and stability in agriculture. According to the agency, the effects of the increase in the Selic rate (basic interest rate) by the Central Bank are the main factors responsible for the drop in the pace of growth.
“Following the strong recovery through 2Q22 [segundo trimestre], economic activity slowed down throughout the third quarter of 2022, mainly due to the performance of industry and commerce. Monthly data from leading and coincident indicators point to continued economic recovery in the fourth quarter, albeit at a less intense pace, largely due to the lagged effects of monetary policy, as signaled in previous bulletins”, highlights the bulletin.
