After four months in decline, economic activity returns to rise in May, indicates BC

After four consecutive falls, the level of activity of the Brazilian economy recorded a slight high in May, in comparison with the month of April, according to the figures disclosed by the Central Bank (BC) on Monday (15). According to the institution, the so-called Economic activity Index (IBC-Br) recorded a high of 0.54% in this period. The number was calculated with "seasonal adjustment", a "compensation" to compare different periods of one year. The IBC-Br, of the Central bank, is an indicator created to try to anticipate the result of the gross domestic product (GDP), which is calculated by the Brazilian Institute of Geography and Statistics (IBGE). In the comparison with May 2018, there was a 3.06% high in the economic activity. In the partial of the year, a high of 0.94% was recorded and, in 12 months until May, a growth of 1.31%. These values were calculated without seasonal adjustment, because they consider equal periods. New forecasts Last week, the Ministry of Economics reduced its growth forecast for the year from 1.6% to 0.81%. For 2020 GDP growth forecast fell from 2.5% to 2.2%. GDP X IBC-Br IBC-Br was created to try to anticipate the result of GDP, which is disclosed by IBGE. The results of IBC-Br, however, did not always show proximity to the official data of GDP. The calculation of the two is somewhat different – the BC index incorporates estimates for agriculture, industry and service sector, in addition to taxes. IBC-Br is one of the tools used by the BC to define the country's basic interest rate. With the lower growth of the economy, for example, theoretically there would be less inflationary pressure.