Market analysts improve GDP growth forecast for Brazil

Published this Thursday, four days late due to the partial work stoppage of Central Bank employees who are negotiating salary increases and other issues with the federal government, the weekly Focus Report surveying the country’s leading financial institutions brings a significant increase in expectations for Brazilian GDP in 2024. 

Analysts raised their projections for this year’s GDP growth to 1.68 percent — expectations had been stationary at 1.6 percent for more than four weeks.

The new median of projections is now close to the Central Bank’s forecast for this year’s GDP (1.7 percent), but still below the expectations of the country’s largest private bank, Itaú, which sees the country’s growth at 1.8 percent “with an upward bias,” and the federal government, which projects growth of 2.2 percent. 

Among the most optimistic analysts, factors such as a slight recovery in the credit market, a reduction in household debt, and a less bleak global growth scenario justify the improved outlook. 

The release earlier this week of the December IBC-Br, the Central Bank’s index that is considered a reliable bellwether of economic activity, may also have boosted forecasts. The index rose by 0.82 percent on a monthly basis, slightly above market consensus, bringing the 2023 increase to 2.45 percent.

Inflation expectations also improved, with the median forecast for the official IPCA index falling from 3.93 percent at the beginning of the year to 3.81 percent. Analysts also raised their trade balance projections slightly, with the surplus forecast for 2024 growing from USD 76.9 billion to USD 80 billion. 

Many experts see last year’s record USD 98.8 billion as a structural shift that will be sustained even with a smaller grain harvest and lower prices.

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