Market reduces inflation estimate, predicts higher GDP growth

published: Jun 05, 2017 12:00 AM, last modified: Jun 05, 2017 11:31 AM

With the improvement in economic indicators, financial experts are looking at a more positive scenario for the economy this year

Market reduces inflation estimate, predicts higher GDP growth

For financial market analysts, the Brazilian economic scenario remains positive for this year - Credit: Marcos Santos/USP Imagens

Financial market analysts have again lowered their forecasts for inflation this year. The current expectation is that Brazil's Broad Consumer Price Index (IPCA) will end the year at 3.90%, down from previous projections of 3.95%.For 2018, current estimates point to inflation ending the year at 4.30%.

At the same time, experts expect the Brazilian economy to end the recession, forecasting a 0.50% increase in GDP, slightly up compared to the 0.49% estimate of a week ago.

The information is part of the Focus Bulletin, a weekly publication released by the Central Bank that compiles and publishes forecasts produced by about 100 independent market analysts.

Boosted by the impact of economic reforms, GDP grew by 1% in Q1 2017 after eight consecutive quarters of decline. Inflation has been falling steadily in recent months, reaching 4.08% in year-to-date terms for April.

Given this positive scenario, analysts expect the basic interest rate, the Selic, to end the year at 8.50%. At the last meeting of the Board of Directors of the Central Bank, the rate was reduced from 11.25% to 10.25% per year.