Citi worsens forecast for Brazil’s GDP and sees contraction of 0.3% in 2022

Citi has worsened its forecasts for Brazilian economic activity. It started to estimate a retraction of 0.3% for the country’s GDP (Gross Domestic Product) in 2022. Previously, the institution pointed to growth of 0.3%.

Its economists also revised downward their 2021 growth forecast, from 4.5% to 4.4%.

The retraction perspective for this year was in line with that of other banks. Itaú, for example, estimates a drop of 0.5% this year, the same forecast by Credit Suisse. Haitong had already estimated a retraction of 0.3% at the end of last year.

The more pessimistic forecasts came on the heels of service sector data released on Thursday (13), which, while better than expected by the market, “do not prevent a downgrade in our GDP forecasts,” Citi said in a statement. report.

According to the IBGE (Brazilian Institute of Geography and Statistics), the volume of services provided in Brazil jumped 2.4% in November compared to October, the highest growth rate since February 2021.

“The overall increase was broad, taking the gauge back to the August 2021 level, but still indicates a 0.3% negative statistical carry for the fourth quarter” from the previous three months, Citi said.

According to the US bank, this adds to a worse-than-expected performance of industrial production, which fell by 0.2% in November, indicating a 0.2% contraction in GDP in the last three months of the year. past.

For this year, the estimate of economic retraction is justified by the perspective of monetary tightening – with the Selic rate expected to reach 12.25% per year in May – and by the spread of the omicron variant of the coronavirus, said Citi, also citing the load. negative statistic coming from the last quarter of 2021. The Selic rate is at 9.25%.

CHALLENGING YEAR

At a global event this Thursday, in which he pointed out the economic outlook for 2022, Citi considered that the new wave of the pandemic and its effects on the economy bring new challenges for the year.

The bank pointed out that inflation will continue to be a global challenge throughout 2022 and that Latin American countries must prepare for a more complex scenario.

Last year, Brazil had the fourth highest inflation among 44 economies highlighted by the OECD (Organization for Economic Cooperation and Development), at 10.06%, according to the IPCA (Extended Consumer Price Index).

The result was not worse than in Argentina (51% up to November), Turkey (36% up to December) and Estonia (12.1% up to December).

The analysts invited by the bank also commented on how the omicron variant and the distrust of banks in relation to the Chinese real estate market also raise uncertainties about the performance of the Asian country.

Collaborated Douglas Gavras