We Forecast the SELIC Rate at the End of the Year will be 7.5%

BRAZIL ECONOMICS - Report 24 Jul 2017 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

We have altered our projection for the SELIC rate at the end of 2017 to 7.5% a year, for three reasons. First, although the economy is on the verge of recovery, all indications are that it will be very slow, keeping the GDP gap negative for a good while longer. Second, mainly due to a highly favorable international climate, the exchange rate, after depreciating (slightly) at the worst point of the political crisis in May, has maintained a clear tendency to appreciate. Third, although the government’s political support is weak, hampering approval of the reforms – chiefly of the pension system – needed for fiscal consolidation, the economic team has maintained the commitment to a primary fiscal target, doing what they can to secure spending increases and increasing taxation of fuels a few days ago. Obviously, this tax hike will have an immediate effect on the IPCA, but our projections show that with the SELIC rate reaching 7.5% by the end of the year, inflation will be 3.7% despite the tax increase, and will rise in 2018 approaching the 4.5% target. The risks in this scenario are discussed at the end of this report.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.