Brazil's financial market upgrades 2023 economic growth forecast

BRASILIA, June 20: Brazil's financial market has upgraded its forecast for the country's gross domestic product (GDP) growth this year from 1.84 percent to 2.14 percent, the Central Bank of Brazil said on Monday.

This marks the sixth week in a row that analysts have improved projections for Brazil's 2023 economic growth.

Analysts consulted by the bank for its weekly survey, however, cut growth expectations for next year from 1.27 percent to 1.2 percent.

According to the latest Focus survey of the country's main financial institutions, market analysts were forecasting growth of 1.2 percent four weeks ago.

Analysts also adjusted their annual inflation forecast, down from 5.42 percent to 5.12 percent for 2023 and from 4.04 percent to 4 percent for 2024.

Brazil's target inflation is 3.25 percent for 2023 and 3 percent for 2024, in both cases with a 1.5 percentage point margin of tolerance.

With lower inflation expected, analysts revised down their forecast for the benchmark interest rate from 12.5 percent to 12.25 percent for 2023, and from 10 percent to 9.5 percent for 2024. The rate is currently at 13.75 percent annually.

Brazil's currency, now trading at 4.89 reals to the U.S. dollar, is expected to trade for 5 reals to the dollar by the end of 2023 and 5.1 reals by the end of 2024.

Brazil's trade balance is expected to see a surplus of 61.15 billion dollars in 2023 and 57.8 billion dollars in 2024. And foreign direct investment in the country is expected to amount to 79 billion dollars in 2023 and 80 billion dollars in 2024, according to the survey.