BRASILIA -Brazil’s Economy Ministry on Thursday raised its forecast for economic growth this year due to stronger results that have been observed in monthly indicators, also maintaining its upbeat view for 2023.
Gross domestic product is expected to rise by 2% rather than 1.5% expected previously, as first reported by Reuters on Tuesday. The ministry maintained its 2023 GDP growth outlook at 2.5%.
The government’s estimates are more optimistic than those by market economists, who see economic growth of 1.59% this year and just 0.5% next year, according to a weekly central bank survey.
Economic Policy Secretary Pedro Calhman stated that the government has observed stronger economic indicators since May, in addition to an improvement in the job market and an increase in private investments.
Both reflect rosier prospects for 2022 and the confidence in next year’s performance, he said during a news conference.
“We don’t see any reason to readjust our projection, we are quite convinced of it,” said Calhman.
The Ministry’s Secretariat for Economic Policy also lowered its 2022 inflation forecast to 7.2% from 7.9% in May, incorporating the impact of measures passed in Congress to reduce taxes on key goods, such as fuel and energy.
Even so, the figure remains far from the official inflation target of 3.5% this year, with a margin of 1.5 percentage point up or down.
For 2023, the government now expects inflation at 4.5%, up from 3.6%, against a 3.25% official target with the same band of 1.5 percentage points.
After Congress approved a massive spending package with increased cash transfers to the poorest and to specific groups such as taxi and truck drivers, Calhman said he did not see inflationary pressures from the measures.
Economy Minister Paulo Guedes said at the news conference that extraordinary revenues of around 57 billion reais ($10.45 billion) this year, coming from solid tax revenue and higher than expected dividends, will fund the 41 billion reais package.
According to Guedes, extra revenues will also compensate for federal tax cuts to lower fuel prices, ensuring a neutral fiscal impact on the 2022 budget.
($1 = 5.4533 reais)
(Reporting by Marcela Ayres; Editing by Hugh Lawson, Tomasz Janowski and Jonathan Oatis)
