Market raises inflation expectations and forecasts higher GDP in 2019

Financial market economists raised inflation estimates for this year and also predicted greater growth in the Brazilian economy. The projections are included in the market bulletin known as the "Focus" report, released on Monday (28) by the Central Bank (BC). The report is the result of a survey last week with more than 100 financial institutions. According to the institution, financial market analysts increased inflation estimate for this year from 3.26% to 3.29%. With this, an 11-week reduction sequence was interrupted. The expectation of market inflation for 2019 remains below the central target of 4.25%. The tolerance range of the target system ranges from 2.75% to 5.75%. The inflation target is set by the National Monetary Council (CMN). To achieve it, the Central Bank raises or reduces the basic interest rate of the economy (Selic). For 2020, the financial market lowered the inflation estimate from 3.66% to 3.60%. It was the fifth consecutive drop in the indicator. Next year, the central inflation target is 4% and will have been officially met if the IPCA fluctuates between 2.5% and 5.5%. Gdp For this year, the estimated rise in Gross Domestic Product (GDP) rose from 0.88% to 0.91%. For 2020, gdp growth forecast continued at 2%. GDP is the sum of all goods and services made in the country, regardless of the nationality of those who produce them, and serves to measure the behavior of the Brazilian economy. For 2019, the Central Bank forecast is up 0.9%, and the Ministry of Economy is up 0.85%. Other estimates Interest rate - The market maintained at 4.5% per year the forecast for the Selic rate at the end of 2019. Currently, the interest rate is at 5.5% per year. With this, the market continues to predict falling interest rates this year. By the end of 2020, the projection fell from 4.75% to 4.5% per year. With this, the market began to predict Selic's stability next year. Dollar - The projection of the financial market for the exchange rate at the end of 2019 remained at R$ 4 per dollar. For the closing of 2020, it remained stable at R$ 4 per dollar. Trade balance - For the balance of the trade balance (result of total exports minus imports), the projection in 2019 fell from US$ 48.85 billion to US$ 47.50 billion of positive results. For next year, market experts' estimates fell from $45 billion to $43 billion. Foreign investment - The report's forecast for the entry of foreign direct investments into Brazil in 2019 rose from US$ 80 billion to US$ 80.35 billion. For 2020, analysts' estimate remained at $80 billion.