The financial market works with expectations of an increase in all indices that make up the Focus Bulletin released this Monday (9) by the Central Bank. In the case of Gross Domestic Product (GDP – the sum of goods and services produced in Brazil), the forecast is that the country’s economy will grow 3.39% in 2024.
For subsequent years (2025 and 2026), the expectation is for growth of 2%. In last week’s bulletin, the market predicted that Brazilian GDP would close the current year with growth of 3.22%. Four weeks ago, the forecast was that the country would grow 3.1%.
In the second quarter of the year, GDP surprised, rising 1.4% compared to the first quarter. According to the Brazilian Institute of Geography and Statistics (IBGE), compared to the second quarter of 2023, the increase was 3.3%.
IPCA, dollar and Selic
High expectations also for inflation, for the Selic and for the dollar exchange rate. For the market, the Broad National Consumer Price Index (IPCA, considered the country’s official inflation) should close 2024 at 4.84%, a percentage above the forecast released last week (4.71%) and four weeks ago ( 4.62%). For 2025 and 2026, the country’s inflation is expected to be 4.59% and 4%, respectively.
The basic interest rate increased by 0.25 percentage points in line with market expectations, rising from 11.75% to 12%. When Copom increases the Selic rate, the purpose is to contain heated demand, and this has an impact on prices because higher interest rates make credit more expensive and encourage savings.
However, banks consider other factors, in addition to the Selic, when defining the interest charged to consumers, such as risk of default, profit and administrative expenses. Therefore, higher rates can also make it difficult for the economy to expand.
When the Selic rate is reduced, the tendency is for credit to become cheaper, encouraging production and consumption, reducing control over inflation and stimulating economic activity.
In relation to the North American currency, financial market projections for the price at the end of the year went from R$ 5.70, last week, to R$ 5.95. Four weeks ago, the market expected the dollar to close the year at R$5.55. For 2025, the market projects that the currency will close the year worth R$5.77; and for 2026, projections are that the dollar will be priced at R$5.73.
