The Secretariat for Economic Policy (SPE) of the Ministry of Finance left its projections for Brazil’s economic growth in 2024 unchanged at 2.2%, while this year it began to see slightly lower price pressure, it showed a bulletin published this Thursday.
In addition to the official estimate for this year’s activity, previewed by Reuters last week, the ministry also reported that it expects a 2.8% increase in gross domestic product (GDP) in 2025, the same level as in the previous bulletin macrofiscal, published in November. of last year.
The SPE projections remain more optimistic than those of the market, which is betting on a GDP increase of 1.8% this year and 2.0% in 2025, according to the Central Bank’s latest Focus bulletin. In 2023, Brazil’s GDP grew by 2.9%, helped by a record cereal harvest and strong results from extractive industries, particularly oil and iron ore.
According to the SPE, despite the maintenance of activity forecasts, there has been a revision of GDP estimates by productive sector, with a slowdown in agriculture counterbalanced by progress in services and industry.
“The (industrial) sector should be driven by the recovery in manufacturing and construction production, which is reflected in investment from a demand perspective,” he said in a note, stressing that growth in 2024 is expected to be “more balanced” this ‘year.
The ministry still expects a 2.5% increase in GDP from 2026 onwards, underlining that to sustain this pace of expansion “the measures promoted by the government will be fundamental”, such as tax reform, microeconomic initiatives and economic stimulus. .
The official update of the data prepared by the SPE serves as a basis for the government to revise the estimate of the trajectory of its revenue and expenditure and forecast whether it will have to comply with fiscal rules for the year, as the performance of the economy influences tax collection.
The fiscal forecast document will be released by the economic team on Friday and, according to government sources briefed on Reuters, it should highlight the need to block 2.9 billion reais to compensate for higher-than-expected expenses, while revenues show a good performance.
As for inflation, the SPE has started to see a 3.50% increase in the HICP this year, slightly below the 3.55% forecast in the latest bulletin. For next year the forecast price increase has been calculated at 3.10%.
The government’s inflation target is 3%, with a tolerance margin of 1.5 percentage points.
“The impact of El Niño on food, ethanol and electricity tariff inflation was less intense than initially expected,” the SPE said, also highlighting smaller adjustments in administered prices.
Source: Terra
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