The expectations for Brazilian economic activity in Central Bank’s Monday’s Focus Survey, with the estimate for this year going below 2 percent.
Expectations for the growth of the Gross Domestic Product (GDP) in 2019 fell to 1.98 percent in the survey released this week, up from 2.00 percent in the previous week. For 2020 there was also a worsening scenario, with the expansion now being estimated at 2.75 percent, at 2.78 percent.
The result comes in the wake of worsening prospects for industrial output, with economists polled estimating growth of 2.50 percent in 2019, up from 2.57 percent earlier. By 2020 the expected increase in industrial production was maintained at 3 percent.
Last week, the BC worsened its projection of GDP growth in 2019 to 2.0 percent, from 2.4 percent earlier, citing the weakness observed in the activity at the end of last year, consequences of the tragedy of Brumadinho (MG) and a lower outlook for the crop this year.
For inflation, the high IPCA accounts remain at 3.89 percent this year and 4.00 in the next. The center of the official 2019 target is 4.25 percent, and 2020, 4 percent, both with a margin of tolerance of 1.5 percentage points to more or less.
Nor have expectations changed that the Selic base interest rate will end this year on the current historical floor of 6.5 percent, going to 7.50 percent in 2020. Top-5, the group that most accurately predicts, provides the same scenario.
At the monetary policy meeting in March, when the interest rate was maintained, the BC indicated that, given the economic recovery below expectations, the balance of risks for inflation started to have equal weights both upwards and downwards, which removed the impediment explicit that the BC was pointing to eventually reduce interest rates ahead.