Market reduces estimate and starts to predict, for the first time, high GDP below 1.5% in 2019

The bank economists again reduced the high estimate of gross domestic product (GDP) and, for the first time, began to estimate an expansion below the mark of 1.5% for this year. The forecast is listed in the market newsletter, also known as the "Focus" report, released on Monday (6) by the Central Bank (BC). The report is a result of a survey made last week with more than 100 financial institutions. For this year's GDP growth, the financial market forecast declined from 1.70% to 1.49% last week. It was the tenth fall followed by the indicator. The beginning of the revisions down in the expectation of growth of the financial market for this year's GDP began after the disclosure of last year's results – when the economy advanced 1.1%. At the end of March, the Central Bank estimated an expansion of 2% for the Brazilian economy this year and the Ministry of Economics projected a growth of 2.2% to 2019. For the next year, the expectation of the financial market for economic expansion remained stable at 2.50%. The bank economists also did not change the forecast to expand the economy to 2021 and 2022 – which continued in 2.5% for the two years. Inflation For 2019, financial market economists raised the expectation of inflation from 4.01% to 4.04%. The central goal of this year is 4.25%, and the tolerance range of the target system varies from 2.75% to 5.75%. The inflation target is fixed by the National Monetary Council (CMN). To achieve this, the Central bank raises or lowers the basic interest rate of the economy (Selic). For 2020, the financial market maintained a 4% inflation estimate – in line with the central goal of 4% for next year. Next year, the target will have been officially fulfilled if inflation oscillating between 2.5% and 5.5%. Other estimates Interest rate-the market kept at 6.5% per year the forecast for the Selic rate at the end of 2019. This is the index currently in effect. With this, the market continues to foreseeing stable interest this year. For the end of 2020, the forecast continued at 7.5% per year. In this way, analysts continue to predict a percentage point in interest next year. Dollar-the projection of the financial market for the exchange rate at the end of 2019 remained at R $3.75 per dollar. For the closing of 2020, it rose from R $3.79 to R $3.80 per dollar. Trade balance-for the balance of the trade balance (result of total exports minus imports), the projection in 2019 advanced from US $50 billion to US $50.39 billion of positive result. For next year, the estimate of market specialists for the surplus remained at US $46 billion. Foreign investment-The forecast of the report for the entry of foreign direct investments in Brazil, in 2019, remained at US $82 billion. For 2020, analysts ' estimates went from US $84.68 billion to US $85 billion.