The market maintains its GDP growth projection at 3% for this year.
For 2014, the country's economic growth estimate also remains the same (3,5%), for seven consecutive weeks; meanwhile, the projection for official inflation was adjusted by analysts from 5,70% to 5,71% in 2013.
Kelly Oliveira
Reporter from Agência Brasil
Brasilia - The estimate from financial market analysts consulted by the Central Bank (BC) for economic growth – Gross Domestic Product (GDP) – this year remains at 3%, for the third consecutive week. For 2014, the same estimate (3,5%) has remained unchanged for seven consecutive weeks.
The forecast for industrial production growth has been revised down from 2,86% to 2,83% this year, while remaining at 3,75% for 2014.
The projection for the ratio between net public sector debt and GDP remains at 34,5% in 2013, and has been adjusted from 33,5% to 33,9% for next year.
The expectation for the dollar exchange rate remains at R$ 2 at the end of this year and R$ 2,05 at the end of 2014. The forecast for the trade surplus (positive balance of exports minus imports) was adjusted from US$ 10,6 billion to US$ 10,25 billion this year, and from US$ 11,3 billion to US$ 11,05 billion in 2014.
For the current account deficit (a record of Brazil's transactions involving the purchase and sale of goods and services with other countries), the estimate increased from US$68,66 billion to US$70 billion this year, and from US$73,95 billion to US$73,3 billion in 2014.
The forecast for foreign direct investment (resources that go to the country's productive sector) was maintained at US$60 billion, both for this year and for 2014.
Analysts adjust official inflation estimate for 2013 to 5,71%.
Financial market analysts have adjusted their projection for official inflation, measured by the Broad National Consumer Price Index (IPCA), from 5,70% to 5,71% in 2013. This is the median (which disregards extremes in the projections) of the expectations of financial institutions surveyed weekly by the Central Bank (BC). For 2014, the projection for the IPCA remains at 5,71%.
Projections for inflation this year and in 2014 are above the central target of 4,5% and below the upper limit (6,5%). One of the Central Bank's functions is to bring inflation closer to the target. To do this, the Central Bank uses the basic interest rate, the Selic, as its main instrument.
Last Thursday (25), the director of Economic Policy at the Central Bank, Carlos Hamilton Vasconcelos Araújo, said that there is a growing conviction that the Monetary Policy Committee (Copom) may "be urged to reflect on the possibility of intensifying the use of the monetary policy instrument [of the Selic rate]".
In the minutes of the Copom meeting, also released on Thursday, the committee's assessment is that inflation is showing resistance, but "internal and, mainly, external uncertainties surround the prospective scenario for inflation and recommend that monetary policy [setting the Selic rate] be managed with caution."
On the 17th, the committee decided, by a vote of 6 to 6, to raise the Selic rate by 0,25 percentage points, to 7,5% per year. Araújo was one of the directors who voted for the Selic rate increase. Only two directors voted to maintain the Selic rate at 7,25% per year.
According to the minutes of the Copom meeting, the committee understood that there was a need to raise the Selic rate to neutralize the risks of continued high inflation, especially next year. However, for the two directors who voted to maintain the rate, an immediate increase in the Selic rate would not be advisable because a reassessment of global growth is underway, and this could have favorable repercussions for price dynamics in the country. But this analysis was not supported by the majority of the committee.
In his speech last week, the director said that the Central Bank "has – and is using – the policy instrument [Selic rate], which, by excellence, is intended to combat inflation and does so effectively." Araújo stressed that, although he acknowledges that inflation and price projections are high, there is no loss of control. "I will disagree with those who argue that inflation in Brazil is out of control. It is not and will not be," he emphasized.
According to research by the Central Bank, financial market analysts expect further increases in the Selic rate, which should end 2013 at 8,25% per year. For the end of 2014, the estimate was reduced from 8,50% to 8,25% per year.
The Central Bank's survey also includes an estimate for the Consumer Price Index of the Economic Research Institute Foundation (IPC-Fipe), which was maintained at 5,12% in 2013 and at 5% next year. The expectation for the General Price Index – Domestic Availability (IGP-DI) was adjusted from 4,80% to 4,81% this year and maintained at 5,10% in 2014. For the General Market Price Index (IGP-M), the estimate changed from 4,91% to 4,92% this year and from 5,30% to 5,31% in 2014.
Analysts' expectations for administered prices were maintained at 2,85% in 2013, and adjusted from 4% to 4,10% for next year.