The Brazilian Gross Domestic Product (GDP), the sum of all goods and services produced in the country, should grow 1.1% this year and 2.3% in 2020. The forecast from the Institute of Applied Economic Research (Ipea) was released last week in Rio de Janeiro. According to the analysis, the expected growth in the fourth quarter of 2019 is 0.4%.
Ipea’s previous estimate was a 0.8% GDP increase in 2019. For 2020, GDP was revised from 2.1% to 2.3%.
Ipea’s projection is very close to that announced by the Brazilian Central Bank (BC) in Brasilia. According to the BC, the forecast for GDP expansion in 2019 went from 0.9%, forecast in September, to 1.2%. For 2020, the projection for GDP growth has been revised from 1.8% to 2.2%.
According to Ipea, the recovery of the economy has gained momentum in recent months, driven mainly by household consumption and investment.
According to Ipea Director of Macroeconomic Studies and Policies, José Ronaldo Souza Júnior, the projection of a more positive scenario for 2020 is based on two factors: the reduction of interest rates as a consequence of the fall in the basic interest rate – Selic is currently at 4.5% per year – and the agenda of reforms such as tax, administrative and the federal pact.
“Lower interest rates stimulate growth in both consumption and investment. The other point is the increase in confidence, which we are basing on this continuity of the reform scenario, which also stimulates investment in infrastructure,” he said.
The Ipea study projects inflation from 3.7% to 2019 – 0.3 percentage points above the previous forecast. For next year, the inflation forecast is 3.76%.
“One of the items that contributed the most to inflation this year was beef. African swine fever, which hit China sharply, increased foreign demand for beef – Brazilian beef exports grew 30 percent between September and October, pushing the price up 8.09 percent in November and pushing inflation up . The cumulative 12-month high through November was 14.4%. With more expensive beef, demand for poultry, pork and eggs has risen, as has the price of these proteins,” says Ipea.
For José Ronaldo Souza Júnior, this increase in meat prices should decrease early next year. “The larger short-term price impact tends to dissipate because this very large increase in exports tends to go at a more normal pace for next year. This short-term impact that was the price increase here in Brazil to be closer to the international price should dissipate and the international price is not fluctuating as strongly as we lived here,” he concluded.
Source: Agência Brasil
Economia deve crescer 1,1% este ano e 2,3% em 2020, prevê Ipea