Projections for the growth of the Brazilian economy in the second year of the pandemic ranged from 3% to 5.3% throughout 2021. The country’s GDP (Gross Domestic Product) advanced 0.5% in the fourth quarter of 2021 and ended the year with growth of 4.6%, according to the IBGE.
The market numbers are not very different from the Ministry of Economy’s projections, which ranged from 3.2% to 5.3%. Those of the Central Bank of Brazil, from 3.8% to 4.7%.
The latest Focus report pointed to growth of 4.5%.
At the beginning of last year, economists consulted in the Central Bank’s Focus survey projected growth of 3.5% for 2021.
This number was being reduced until April, when it reached the lowest level of the year in the face of a worsening in the health crisis that caused new restrictions on circulation.
The so-called second wave, however, had a greater impact on health, but less on the economy. As a result, forecasts for the year’s GDP began to improve and reached their highest point in August.
When it became clear that the economy had stopped growing and that rising inflation would require further interest rate hikes, they took a turn for the worse.
In addition, the federal government and Congress decided to break the spending ceiling to increase expenses, some of them unrelated to the health crisis, which contributed to the worsening of financial conditions (interest and exchange rates, for example) and the confidence of agents. economic.
For 2022, the projections at the beginning of last year were at 2.5% growth. Since March they have been reduced and are currently at 0.3%.
Projection errors became more frequent during the pandemic. The health crisis caused supply bottlenecks, changes in input prices and changes in baskets and consumption patterns. These changes call into question the projection models used by economists and public authorities.
Several governments have also adopted stimulus programs at levels not seen in recent decades, causing distortions in investment and savings decisions.
In 2020, the health crisis led to a negative surprise mainly in GDP data. In 2021, the central issue was price indices, with unexpected inflation, also linked to the pandemic, and which still persists in 2022.
Recently, the rise in prices gained strength with the war in Ukraine, which already worries the Brazilian government.
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